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Wall Street Opens Higher as Bond Jitters Ease; Dow up 510 Pts

U.S. stock markets opened sharply higher on Monday after the easing of jitters in bond markets over the first signs…

By financial2020myday , in Stock Markets , at March 1, 2021

U.S. stock markets opened sharply higher on Monday after the easing of jitters in bond markets over the first signs of inflation in the post-Covid economy.

By 9:40 AM ET (1440 GMT), the Dow Jones Industrial Average was up 510 points, or 1.7%, at 31,442 points. The S&P 500 and the Nasdaq Composite were both up 1.6%. All three indexes had retreated last week amid fears that the Federal Reserve and other central banks could be stampeded into cutting monetary policy support for the economy, due to inflationary pressures. The jitters that sent bond yields to their highest in over a year were in turn fed by higher commodity prices and the prospect of heavy U.S. Treasury issuance after the administration’s $1.9 trillion stimulus package passed through the House of Representatives.

Underlying price pressures appeared to be still bubbling in the U.S. manufacturing sector, as the Institute for Supply Management’s monthly report showed the index for prices paid by manufacturers rising at the fastest rate since 2008, reflecting in many cases supply chain constraints triggered by the pandemic. Comments from various sectors quoted by the ISM signaled an increasingly problematic situation for some sectors, notably chemicals, which stand to be affected for weeks by the closure of Gulf Coast refineries in February due to the cold snap.

“Things are now out of control. Everything is a mess, and we are seeing wide-scale shortages,” the ISM quoted one respondent in the electronics sector as saying.

The ISM’s main index rose meanwhile to its highest since September 2018, when Donald Trump stepped up his attacks on China with the imposition of broader tariffs on imports from the country.

Supporting the tone was the approval for emergency use against Covid-19 of Johnson & Johnson (NYSE:JNJ)’s single-shot vaccine. The drug should accelerate the spread of immunity through the U.S. population and facilitate the quick reopening of the economy. J&J stock rose 1.7%, but appears still to be in a downward trend after authorization was fully discounted by the market in the previous weeks.

Boeing (NYSE:BA) stock was an early gainer, rising 5.6% after United Airlines (NASDAQ:UAL) bolstered an order for 737 MAX planes. That accounted for some of what has now become a familiar pattern of outperformance by ‘value’ stocks over the tech-focused growth stocks that dominated last year’s rally.

Another big gainer was Exxon Mobil (NYSE:XOM) stock, which rose 5.6% after the oil and gas major said it has appointed activist investor Jeff Ubben and Comcast (NASDAQ:CMCSA)’s former chief financial officer Michael Angelakis to its board.

On a day when most of last week’s losers were correcting upwards, notably Apple (NASDAQ:AAPL) stock and Tesla (NASDAQ:TSLA) stock, one of the last week’s big winners, Airbnb stock, fell 4.7% after a reported downgrade from Morgan Stanley (NYSE:MS) analysts.

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