Wall Street Close: Dow jumps the most in three months as bulls battle the Fed


  • US equities post notable gains as markets overcome Fed’s bearish rhetoric amid mixed signals from the latest Fedspeak.
  • Crypto-linked firms lose on China’s crackdown, Microsoft reached intraday record high.
  • US Treasury yields rebound from the four-month low, Crude oil refresh multi-month top.
  • Fed Chair Powell’s testimony poised to strengthen recovery moves.

US shares rally on Monday, led by the Dow Jones Industrial Average (DJI), as recovery hopes regain the market’s attention amid Fed policymakers’ sustained efforts to tame the tapering woes. Markets cheer recovery in the US Treasury yields from the lowest since February, as well as upbeat data and a run-up in oil prices, to portray an upbeat start of the week.

Fed Chairman Jerome Powell’s prepared remarks for Tuesday Testimony keep terming the inflation risk as transitory, causing no major challenges to the present monetary policies. The Fed Boss also flaunts the availability of tools with the US central bank if needed to use. Alternatively, New York Fed President John C. Williams takes multiple turns in his latest speech that recently mentioned that Fed is talking about talking tapering. Dallas Fed President Robert Kaplan was on the same line while favoring “taking the foot off the accelerator sooner rather than later.” Furthermore, St. Louis Fed President James Bullard sounded a bit calmer while saying that the low interest rates and low inflation rate era are not ending any time soon.

Additionally, the upbeat Chicago Fed National Activity Index, from downwardly revised -0.09 to +0.29 in May, joins WTI’s fresh high since October 2018 to keep markets optimistic.

Amid these plays, DJI marks the heaviest jump since early March, up 1.76% or 586.39 points, to 33,876.97 whereas S&P 500 Futures came in second while rising 58.34 points, or 1.40%, to 4,224.79. It’s worth noting that technology shares were the laggards, weigh on the Nasdaq. That said, the tech-heavy index posts 111.10 points of a rise, or 0.79% upside, to end Monday’s North American trading session around 14,141.

It’s worth noting that a jump in the US Treasury yields and drawdown in Cryptocurrencies, due to China’s crackdown on mining these volatile e-currencies, weighed on the technology shares but Microsoft posted the record intraday top.

Shares of RIOT Blockchain and Coinbase Global dropped while Moderna shares benefited from the news of adding two new production lines. MicroStrategy lost nearly 10% as the firm added cryptocurrencies to its holdings despite the latest fall.

Having witnessed an upbeat start to the week, investors may wait for Fed Chair Powell’s testimony to reconfirm his initial remarks suggesting no immediate challenges to the easy money policies. Also likely to entertain the markets could be the updates on US President Joe Biden’s infrastructure spending plan as well as second-tier US data.

 

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