Stocks rose on Tuesday as a decline in Treasury yields stabilized, assuaging fears of an economic slowdown.
The Dow Jones Industrial Average jumped 159 points, led by a gain in Walt Disney. The S&P 500 rose 0.7 percent as the energy, tech and health care sectors outperformed. The Nasdaq Composite advanced 0.8 percent.
Apple rose more than 1.4 percent, recovering losses from the previous session as investors digested the company’s launch of a slew of different services. Shares of Facebook and Amazon traded more than 1 percent higher. Nvidia also traded higher.
The benchmark 10-year U.S. yield traded at 2.43 percent a day after reaching its lowest level since December 2017. The 10-year’s decline caused a so-called yield-curve inversion as the 3-month Treasury bill yield moved above the benchmark rate. Investors see a yield-curve inversion as a signal that a recession may be on the horizon, so a rise in long-term rates is being viewed as a positive right now.
The yield curve inverted amid the release of weak economic data from the U.S. and around the world as well as a downgraded U.S. economic outlook from the Federal Reserve.
“There’s lots of angst about global economic growth. That’s understandable because it has been slowing significantly since early 2018,” Ed Yardeni, president and chief investment strategist at Yardeni Research, wrote in a note. “Furthermore, we can all observe that ultra-easy monetary and debt-financed fiscal policies aren’t as stimulative as policymakers have been hoping.”
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Housing starts fell 8.7 percent in February, widely missing expectations. Building permits declined, but at a slower rate than forecast by economists. Consumer confidence declined in March to 124.1 from 131.4 in February, according to data from The Conference Board.
The Dow closed Monday with a small gain. News that special counsel Robert Mueller did not find evidence that President Donald Trump colluded with Russia in the 2016 presidential race bolstered the markets by removing some uncertainty. Investors were also hopeful that with the Mueller investigation out of the way, Trump will turn his attention to cementing trade deals.
However, concerns regarding the global economy capped market gains in the broader market.
“Expectations are for a pretty weak first quarter overseas to go along with a fairly weak U.S.,” said Sam Stovall, chief investment strategist at CFRA Research. “The real question is whether it’s just a weak first quarter and then it recovers. Our expectation right now is that it is more of a soft landing.”
“I think we’re just going through a pretty healthy digestion of gains,” Stovall said. “Q1 softness will probably be followed by a recovery in Q2, both on an economic perspective as well as an earnings outlook. I would tell investors you are probably better off buying than you are bailing.”
Equities rallied to start off 2019, with the S&P 500 rising more than 11 percent year to date.
Shares of Bed Bath & Beyond skyrocketed more than 26 percent after The Wall Street Journal reported three activist investors are trying to replace the company’s entire board of directors.
Nvidia shares rose 2.2 percent after Piper Jaffray initiated coverage of the chipmaker with an overweight rating, noting its attractive valuation.
Source: cnbc.com | Original Link