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The US stock market turns optimistic by absorbing the rise in Treasury Yield. Wall Street remains on the edge awaiting the CPI inflation data on Thursday.
On Tuesday, February 7, ahead of the key inflation data the US stock market registered a healthy bounce back after a slow start to the week. The blue-chip Dow Jones Industrial Average (INDEXDJX: .DJI) was up 1.06% or 370 points ending the trading day at 35,462 levels.
Similarly, the tech-heavy Nasdaq Composite (INDEXNASDAQ: .IXIC) was up 1.28% ending the day above 14,100 levels. The major reason behind this bounce-back was strong corporate earnings.
Banking stocks like American Express and JPMorgan helped the north drive on Dow, Both of them gained 3.3% and 1.9% respectively.
Also, motorcycle giant Harley Davidson registered a surprising 15% jump after the company reported a surprise profit during the fourth quarter. In a note to clients, Edward Moya, senior market analyst at Oanda, said:
“The S&P 500 reversed losses as Wall Street rotated into materials, technology, and financial stocks. Now that we are both over the hump with earnings season and investors are prepared for another hot inflation report, the ongoing rotation trade will likely continue. Today, traders are finding value in tech and embracing financials as global bond yields steadily increase.”
Wall Street Awaits Key Inflation Data
Wall Street still remains on the edge as the US Federal Reserve is all set to release the country’s inflation data for January 2022. Thursday’s data about Consumer Price Index (CPI) will be key in deciding the market movement ahead.
The expectations are that prices have surged by 0.4% in January. This will be a 7.2% gain from a year ago marking it the highest ever in 40 years. Furthermore, on Monday, the Treasury yields have touched the fresh pandemic-era highs. On Tuesday, the 10-year Treasury Note yielded 1.97%, the level last seen in November 2019.
Speaking to CNBC, Angelo Kourkafas, investment strategist at Edward Jones said:
“It’s reasonable to expect that stocks are going to be in a holding pattern before Thursday’s CPI release. I think it is encouraging we are seeing the market absorb the rise in long-term yields pretty well. At this point, it is a tug-of-war between solid corporate and economic fundamentals and monetary policy tightening”.
One of the major losers on Tuesday was Pfizer. The pharmaceutical giant witnessed its share price sliding at 2.8% after the drugmaker’s Q4 2021 revenue came to be lower than Street estimates.