Dow rallies 399 points on sinking Treasury yields

By StocksFOXBusiness

Will the Fed put a hold on the bullish market?<br>

Kaltbaum Capital Management President Gary Kaltbaum and Belpointe Asset Management Chief Strategist David Nelson on the stock market’s correction from the sell-off and how the Federal Reserve’s new chairman Jerome Powell will impact the markets.<br>

Stocks extended their rally with strong gains Monday, as the market continues to claw back its losses from earlier this month.

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The Dow Jones Industrial Average rallied 399.28 points, or 1.58%, to 25,709.27. The S&P 500 advanced 32.30 points, or 1.18%, to 2,779.60. The Nasdaq Composite gained 84.07 points, or 1.15%, to 7,421.46.

Technology stocks helped lead the market’s rally, with industry giants Amazon and Netflix hitting fresh records. Boeing, JPMorgan and Nike—all Dow components—also touched fresh highs Monday.

Stocks have bounced back after experiencing a heavy sell-off to kick off February. Investors had grown concerned that the Federal Reserve would accelerate the pace of interest rate hikes, but those worries have dissipated.

The yield on the benchmark 10-year note slipped for a third day to around 2.86%, and touched its lowest level in almost two weeks. Investors are reacting to reports over the weekend that the Federal Reserve may be comfortable with inflation as high as 2.5%, materially above the Fed’s current target of 2%. Consistent with this view, St. Louis Fed president William Bullard warned Monday that continued rate hikes by the Fed could result in a policy that’s too tight for current economic conditions.

Investors will be listening this week to central bank heads Mark Carney of the Bank of England, Mario Draghi of the European Central Bank and from the new Federal Reserve chief.

“The one not to miss this week though will be new Fed Chair Jerome Powell’s appearances before the House Financial Services Committee (Tuesday) and Senate Banking Committee (Thursday) as he lays out his plans for interest rates this year and beyond and we learn whether the central bank under his leadership will differ from that of Yellen’s,” said Craig Erlam, senior market analyst at Oanda.

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Also, a full plate of economic reports is on tap this week including reports on fourth-quarter GDP and manufacturing. New home sales dropped for the second consecutive month in January, the Commerce Department said Monday. Case-Shiller home prices will be released on Tuesday, followed by pending home sales on Wednesday.

Retail earnings will also be in the spotlight with Macy’s reporting on Tuesday and Lowe’s on Wednesday along with others.

FOX Business Senior Editor Charles Brady contributed to this report.

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