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U.S. Treasury yields slip after rally
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Seagen surges on Pfizer-buyout report
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Union Pacific jumps as CEO to step down
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Dow up 0.43%, S&P 500 up 0.58%, Nasdaq up 0.94%
(Updates to mid-afternoon, changes byline)
By Chuck Mikolajczak
NEW YORK, Feb 27 (Reuters) - U.S. stocks rose modestly
on Monday as investors engaged in some bargain hunting after
last week's losses, the biggest percentage declines of 2023 for
the main benchmarks, on jitters about potential interest rate
hikes to tame stubbornly high inflation.
Each of the three main indexes climbed more than 1% shortly
after the opening bell, in part due to an easing in Treasury
yields. Then, stocks gave up some gains as yields moved off the
day's lows. The yield on two-year Treasury notes ,
which typically moves in step with interest rate expectations,
slipped after touching a near four-month high.
"A little bit of a bounce because Friday’s reaction was an overreaction," said Ken Polcari, managing partner at Kace Capital Advisors in Boca Raton, Florida.
"If inflation does not subside and it continues to creep higher over the next couple of months (the Fed) absolutely could force it higher. The realization now is there is no pivot coming this year and the people who still think a pivot is coming this year need their heads examined." The Dow Jones Industrial Average rose 141.43 points, or 0.43%, to 32,958.35, the S&P 500 gained 23.19 points, or 0.58%, to 3,993.23 and the Nasdaq Composite added 107.45 points, or 0.94%, to 11,502.39. Last week, the Dow Industrials fell by the biggest weekly percentage since September, and the S&P 500 and Nasdaq had their biggest weekly percentage fall since December as economic data and comments from U.S. Federal Reserve officials heightened expectations the central bank will become more aggressive in raising interest rates. Economists at UK-based banks Barclays and NatWest believe the Fed could ramp up the pace of its interest-rate rises in March with a half-point hike. Morgan Stanley said it no longer sees a cut by the Fed this year and expects a slower pace of 25 basis points when the central bank does begin lowering rates.
Fed funds futures show traders are pricing in a third 25 bps hikes this year and see rates peaking at 5.4% by September. Fed Governor Philip Jefferson said he had "no illusion" that inflation would quickly fall back to target and was committed to keeping restrictive monetary policy in place for as long as needed. Data showed new orders for key U.S.-made capital goods increased more than expected in January while shipments of core goods rebounded, suggesting that business spending on equipment picked up. Easing yields helped growth stocks rebound 0.91%, while Tesla jumped 6.14% after the electric automaker said its plant in Brandenburg near Berlin was producing 4,000 cars a week, three weeks ahead of schedule according to a recent production plan reviewed by Reuters. Seagen Inc surged 9.73% after the Wall Street Journal reported that Pfizer was in early talks to acquire the biotech firm. Pfizer's shares lost 1.69%. U.S. railroad operator Union Pacific climbed 10.08% as Chief Executive Lance Fritz said he would step down. Hedge fund Soroban Capital Partners had called for his ouster. Advancing issues outnumbered declining ones on the NYSE by a 2.30-to-1 ratio; on Nasdaq, a 1.66-to-1 ratio favored advancers. The S&P 500 posted four new 52-week highs and five new lows; the Nasdaq Composite recorded 58 new highs and 82 new lows. (Reporting by Chuck Mikolajczak; Editing by David Gregorio)
