US Stock Market, What Else is Happening?

  • 2022-03-23 11:11:23
  • 5 min read
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Stocks came out of a volatile session after Fed Chair Jerome Powell announced that "inflation was too high" and vowed to take "necessary steps" to curb it. The Dow Jones Industrial Average futures rose 119 points (0.4%), S&P 500 futures rose 0.2% and the Nasdaq Composite index was flat.


Stocks are not the only ones rising, the 2-year Treasury yield, which attempts to measure short-term interest rates for the next few years has risen to 2.17%. Just a day after Powell announced that the central bank would consider raising interest rates in increments of 0.5 points instead of the usual quarter points, a sign that the Fed is serious about restricting inflation. Meanwhile, 10-year Treasury yields have risen to 2.34%, which is also a pandemic high.


Nevertheless, the stock market seems to have taken a moderate rise in bond yields. “[Bottom] line, equities have shown resilience in the face of the surge in yields since last week’s Fed meeting, however, if we see yields accelerate higher again today like we did yesterday, it will be increasingly difficult for stocks to extend their recent rally,” wrote Tom Essaye, founder of Sevens Report Research.

 

The US stock market continues to recover from recent lows as investors buy struggling stocks. The S&P 500 has risen by just over 7% after hitting a 2022 low on March 8 and then digging deep into the correction zone (defined as a 10% or more drop from a high). Investors seem to have gained a big amount of cash that they were eager to put to work as stock prices had fallen.


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