Stocks continued a rebound that began on Friday to begin recovering from a sharp weekly loss, despite a heavy economic docket that will be headlined by key inflation reports. Treasury yields added to a recent rally and the U.S. dollar pared back some of a gain from multi-year lows, while crude oil prices were mixed and gold was higher. News on the equity front was light ahead of some key earnings reports coming later in the week, but General Dynamics announced that it agreed to acquire CSRA for about $6.8 billion, excluding debt.

The Dow Jones Industrial Average (DJIA) jumped 410 points (1.7%) to 24,601, the S&P 500 Index advanced 36 points (1.4%) to 2,656, and the NASDAQ Composite rose 107 points (1.6%) to 6,982. In heavy volume, 1.0 billion shares were traded on the NYSE and 2.2 billion shares changed hands on the NASDAQ. WTI crude oil inched $0.09 higher to $59.29 per barrel and wholesale gasoline lost $0.02 to $1.68 per gallon. Elsewhere, the Bloomberg gold spot price gained $6.25 to $1,322.90 per ounce, and the Dollar Index—a comparison of the U.S. dollar to six major world currencies—was 0.3% lower at 90.14.

Treasuries were lower in choppy action amid an economic calendar void of any major releases today, as the yield on the 2-year note rose 1 basis points (bps) to 2.07%, the yield on the 10-year note increased 3 bps to 2.85%, and the 30-year bond rate was flat at 3.14%.

Bond yields added to a recent jump and the U.S. dollar retreated from a bounce as of late off of multi-year lows, while the stock markets extended a recovery from a sharp weekly drop to correction territory that came courtesy of heightened volatility.

Inflation concerns have been a source of the jump in bond yields, which has contributed to the ramped up stock market volatility. This sets the stage for this week’s economic data, which will bring January reads on inflation in the form of the Consumer Price Index (CPI), Producer Price Index (PPI) and Import Price Index, all expected show prices accelerated. Moreover, the health of the consumer will also be on display, with the releases of January retail sales and the preliminary February University of Michigan Consumer Sentiment Index.

Schwab Center for Financial Research – Market Analysis Group

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