Stocks Make Late-Day Run, Partially Erasing Large Early Tech Losses…..

U.S. stocks benefited from a late-day surge and closed mixed, as early losses, particularly in the Information Technology sector were pared back. Federal Reserve Chairman Jerome Powell maintained a dovish tone in his Congressional testimony on monetary policy, as the Fed Chief again reiterated that the Central Bank remains focused on ensuring the economic recovery continues and supporting the struggling labor market despite heightened inflation expectations. Powell’s comments downplaying inflation risk and indicating a positive growth outlook helped kick start stocks to stage their late rally. Earnings season began to wind down with a few notable reports from the retail sector, as Dow member Home Depot delivered upbeat results and an increased dividend, however provided no forward guidance, while Macy’s Q4 performance topped forecasts. Economic data was relatively positive as Consumer Confidence rose and regional manufacturing activity stayed in expansion territory. Treasuries were mixed, as the markets closely followed Powell’s testimony. The U.S. dollar was higher, crude oil was little changed, and gold was lower. Asia finished mixed, though Japan was closed for a holiday, and European equities diverged as Tech fell but Energy and Financials rose.

The Dow Jones Industrial Average rose 16 points (0.1%) to 31,537, the S&P 500 Index was up 5 points (0.1%) at 3,881, and the Nasdaq Composite lost 68 points (0.5%) to 13,465. In heavy volume, 1.3 billion shares were traded on the NYSE and 7.4 billion shares changed hands on the Nasdaq. WTI crude oil lost $0.03 to $61.67 per barrel. Elsewhere, the Bloomberg gold spot price decreased $4.40 to $1,805.27 per ounce, and the Dollar Index—a comparison of the U.S. dollar to six major world currencies—was 0.1% higher at 90.13.

Fed Chairman testimony on Capitol Hill stays dovish to headline economic marquee…..

Treasuries were mixed in choppy action, as the rate on the 2-year note was little changed at 0.11%, the yield on the 10-year note declined 1 basis point (bp) to 1.36%, and the rate on the 30-year rose 2 bps to 2.19%.

The Treasury yield curve has steepened noticeably as of late, amid heightened expectations of a strong economic rebound and as some data points have suggested inflation may be starting to heat up. The noticeable rise in bond yields has fostered some concerns about the loft valuations in the equity markets and whether the moves may force the Federal Reserve to tweak its highly accommodative monetary policy that has been a major contributor to the bullish backdrop.

The Conference Board’s Consumer Confidence Index rose to 91.3 in February from January’s downwardly revised 88.9 level, and versus the Bloomberg consensus estimate calling for a slight improvement to 90.0. The stronger-than-expected read came as a solid gain for the Present Situation Index portion of the survey more than offset a decline in the Expectations Index of business conditions for the next six months. On employment, the labor differential—consumers’ appraisal of jobs being “plentiful” minus being “hard to get”—moved back into positive territory, posting a reading of 0.7 following the -2.5 level posted in January.

The Richmond Fed Manufacturing Activity Index was unchanged but remained solidly in expansion territory (a reading above zero) for this month. The index held at January’s 14 reading versus forecasts of a modest rise to 15.0. Growth in new orders decelerated, along with employment, but the expansion in shipments accelerated.

The 20-city composite S&P CoreLogic Case-Shiller Home Price Index showed a 10.10% y/y gain in home prices in December, versus estimates of a 9.90% increase. Compared to the prior month, home prices were up 1.25% on a seasonally adjusted basis, matching forecasts.

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