The Dow Jones Industrial Average, S&P 500 index, and Nasdaq Composite on Monday advanced to back-to-back record finishes, starting the week the way the ended last week. The record finish comes as investors await semiannual testimony from Federal Reserve System Chairman Jerome Powell beginning Wednesday and a batch of economic reports throughout the week, the unofficial start of corporate quarterly results. Major stock indexes rose to back-to-back closing records on Monday. The advance came before a variety of key events that would function catalysts later within the week, including the unofficial start of earnings season, which JPMorgan Chase & Co. JPM, +1.43% will begin Tuesday, Powell’s testimony on Capitol Hill, and fresh readings on inflation.
“People are thinking earnings are getting to be strong which may propel the market higher,” said John Carey, director of Equity Income at Amundi U.S., adding that, for now, earnings have overshadowed uncertainty in Washington over planned infrastructure spending and potentially higher corporate taxes. “Most people seem to be focused on the strength of the economy and therefore the possibility of higher earnings to support stock prices, which are definitely at high levels,” Carey told MarketWatch.
Equity markets experienced a bout of turbulence last week before ending with a flourish, prompted partly by a drop in Treasury yields. Lower bound rates for state debt had raised questions on the outlook for the U.S. economy within the recovery from the pandemic. The spread of the delta variant of COVID-19 has emerged as a priority , but so has the lofty valuations assigned to some segments of the market. Questions about the Fed’s monetary policy within the face of growing evidence of percolating inflation even have been blamed for a few of the rocky trading.
Yields for the 10-year TMUBMUSD10Y, 1.374% edged up but a basis point to 1.362% on Monday, while the 30-year Treasury yields TMUBMUSD30Y, 2.003% advanced by 1.2 basis points to 1.993%, near lows last seen in February. Federal Reserve Bank of latest York President John Williams told reporters Monday that conditions for scaling back its $120 billion a month bond-buying stimulus program have yet to be met. Although inflation and peak growth concerns still percolate and worry U.S. households, some strategists said those concerns could also be “over-hyped” for markets.
“Both the previous inflation concerns and therefore the current peak growth concerns are likely over-extrapolated reflections of near-term trends which will not persist,” Glenmede’s team led by Jason Pride and Michael Reynolds, wrote during a Monday note. “Markets may remain volatile as they plan to suits the rapidly evolving information flow during the continued recovery from the pandemic,” but those factors “should not be disruptive of markets long run .” Investors even have been keeping an eye fixed on delta-driven COVID infections. The U.S. leads the planet with a complete of 33.85 million COVID cases and in deaths with 607,156. Dr. Anthony Fauci said on Monday that boosters weren’t needed for now, but during a Sunday CNN interview said it had been “horrifying” to ascertain conservatives cheer for low vaccination rates, blaming “ideological rigidity” for hobbling the fight against the pandemic.
“We have long warned that vaccinations would be unlikely to trigger a smooth transition to normalcy,” Ben May, Oxford Economics’ director of worldwide macro research wrote Monday. No key data were on deck Monday before a busy week in economic reports, starting with a reading of consumer prices on Tuesday. Separately, investors also were focused on discussions among finance ministers from the G-20, who try to assess the potential implications of a proposal for a worldwide minimum tax.
“We need sustainable sources of revenue that don’t believe further taxing workers’ wages and exacerbating the economic disparities that we are all committed to reducing,” U.S. Treasury Secretary Janet Yellen said during a speech to European Union countries about revamping the company tax code internationally. “We got to put an end to corporations shifting capital income to low tax jurisdictions, and to accounting gimmicks that allow them to avoid paying their justifiable share,” she said.