Bulls Catch Their Breath in the Thin Air of Record High Altitude…..

U.S. stocks diverged on the heels of the long holiday weekend, appearing to reflect on the recent run back to record highs. The high-flying Consumer Discretionary and Information Technology sectors saw some profit taking, while a persistent steepening of the yield curve and the severe cold weather across the nation boosted Financials and Energy issues, respectively. The bullish backdrop remained regarding progress on COVID-19 vaccine rollouts and cases trends, along with highly accommodative fiscal and monetary policies. Moreover, a busy economic week got off to a positive start, with February manufacturing activity in the New York region jumping, ahead of tomorrow’s reads on inflation and retail sales. Earnings season continued to head toward the home stretch, with CVS Health being hampered by its profit outlook, while results from AutoNation boosted its shares. The U.S. dollar overcame early losses and finished flat, gold fell and crude oil prices traded mixed. Europe slipped late in the session to modestly trim some of yesterday’s solid advance, while Asia finished mostly higher.

The Dow Jones Industrial Average rose 64 points (0.2%) to 31,523, the S&P 500 Index was down 2 points (0.1%) at 3,933, and the Nasdaq Composite declined 48 points (0.3%) to 14,048. In heavy volume, 1.0 billion shares were traded on the NYSE and 7.5 billion shares changed hands on the Nasdaq. WTI crude oil increased $0.58 to $60.05 per barrel. Elsewhere, the Bloomberg gold spot price fell $23.38 to $1,795.48 per ounce, and the Dollar Index—a comparison of the U.S. dollar to six major world currencies—was little changed at 90.51.

The Empire Manufacturing Index, a measure of activity in the New York region, jumped to 12.1 in February from 3.5 in January, and well above the Bloomberg consensus forecast of a rise to 6.0. A reading above zero denotes growth. The report marks the eighth-straight month of expansion, as growth in employment and new orders both accelerated.

Treasuries traded solidly lower, with the rate on the 2-year note ticking 1 basis point (bp) higher to 0.12%, the yield on the 10-year note jumping 9 bps to 1.30%, and the 30-year bond rate gaining 7 bps to 2.08%.

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