With growth shares outperforming so-called value stocks, investors bet that a larger-than-expected inflation rise wo n't be enough to slow economic stimulus measures.
The S& P 500 touched an all-time high even after the U.S. suggested banning Johnson Johnson vaccines amid health concerns. The tech-heavy Dow Jones Industrial Average also reached a record while the Nasdaq 100 rose. The Consumer prices climbed more than expected last month, but investors speculated that the acceleration was not fast enough to warrant any Fed policy change. The Treasury yields largely remain stable; While the jump in CPI is pretty significant, the market could take it with a grain of salt- it could already be priced in as the market has been put off by rates for some time, said Mike Loewengart, managing director of investment strategy at E Trade Financial.
The minor curveball is the J& J vaccine halt today, although this too can be shrugged as a real setback. While this may cause some short-term volatility, investors have been very steadfast in their belief in a full economic recovery. J& J shares fell as officials agreed to the pause and started an investigation into a link from its shot to rare and severe blood clots, while rivals Moderna Inc. and Pfizer Inc. advanced.
The U.S. anticipates having enough other vaccines during this period. Investors returned to stay-at-home companies while selling travel shares such as Carnival Corp. and Royal Caribbean Cruises Ltd. American Airlines Group Inc. also flocked back. Fund managers in the world now see inflation, a taper tantrum and higher taxes as bigger risks than Covid 19 according to the latest Bank of America Corp. Survey.
A lot of growth and inflation have already been priced into the market, said John Hancock Investment Management co-chief analyst Emily Roland.
It's almost as if you need to exceed expectations in order to see a more pronounced reaction from markets. Although policymakers at the Federal Reserve expect a bump in consumer prices to be short-lived, many traders disagree with fears of faster CPI playing out across duration-heavy assets from bonds to tech stocks.
The Treasury plans to sell 30 year bonds Tuesday, after three- and 10-year notes attracted decent demand Monday.
Meanwhile, Bitcoin jumped to an all-time high as the mood of cryptocurrencies went public before Coinbase Global Inc. went public.
Oil traded near$ 60 a barrel; some important events to watch this week: Banks and financial firms begin reporting first quarter earnings on Wednesday.Monday features JPMorgan Chase Co. Citigroup Inc. Bank of America Corp. Morgan Stanley, Goldman Sachs Group Inc. Economic Club of Washington hosts Fed Chair Jerome Powell for a moderated Q& A. China releases Beige book on Wednesday.U.S.
Data including early jobless claims, industrial production and retail sales come on Thursday.China economic growth, industrial production and retail sales figures are on Friday.
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