Stocks are flat as rally to records takes a breather
US stocks fluctuated Tuesday after both the Dow Jones Industrial Average and the S&P 500 closed at record highs in the previous session as strong economic data raised hopes for a smooth rebound.
The blue chip Dow fell 20 points while the S&P 500 rose 0.1%. The tech-heavy Nasdaq Composite rose 0.2%.
Airline and cruise company stocks continued their recent gains. United Airlines was up 1.6% while Delta was up 2.7%. Carnival, Norwegian Cruise Line and Royal Caribbean were all trading in the green.
The Department of Labor said US job vacancies rose 268,000 last February to 7.4 million. This is the result of the monthly survey on job vacancies and turnover (JOLTS). Economists polled by Dow Jones expected a total of 7 million.
It did so after Friday’s blowout jobs report, and a surge in service industry activity showed that the economic recovery was gaining momentum amid the accelerated adoption of vaccines.
“The vaccinations are being rolled out at a record high, and the historic economic effort by Congress has paved the way for continued positive market momentum,” said Chris Larkin, chief executive officer, trading and investing products, E-Trade Financial.
Bond yields were again calm, with the 10-year government bond yield remaining steady at 1.71%, allaying fears of rising inflation. The 10-year rate fell slightly to 1.70% on Tuesday morning.
Cleveland Federal Reserve president Loretta Mester told CNBC Monday that she was largely unaffected by this year’s surge in government bond yields.
“I think the higher bond yields are understandable in the context of the improving economic outlook. The increase was an orderly increase,” Mester said. “So I’m not concerned about the rise in yields at this point. I don’t think the Fed can act on anything.”
Investors continue to evaluate President Joe Biden’s $ 2 trillion infrastructure proposal announced last week and its chance to materialize. While politicians on both sides of the aisle support funding to rebuild American roads and bridges, disagreements persist over the ultimate bill and how to pay, including Biden’s plan to raise corporate tax to 28%.
Biden said Monday he was not concerned that a corporate tax hike would harm the economy. West Virginia Conservative Democratic Senator Joe Manchin reportedly said he was opposed to the proposed tax hike to such a high level.