Wall St climbs as lower Treasury yields push mega-cap stocks higher

March 6 (Reuters) – US stock indices rose on Monday as Treasury bond yields fell further ahead of Federal Reserve Chairman Jerome Powell’s testimony and this week’s jobs data that could provide new clues as to trajectory of interest rates.

Price-sensitive megacap stocks, including Apple Inc (AAPL.O), Microsoft Corp (MSFT.O) and Meta Platforms (META.O), were the main drivers for the S&P 500 and the Nasdaq as yields on US Treasury bonds with a maturity of 10 years. fell to its lowest level since March 1 at 3.91%.

The two-year rate slowly fell to 4.85%, after hitting its highest since 2007 last week.

Rising bond yields tend to weigh on equity valuations, especially those of growth and technology stocks, as higher interest rates lower the value of future cash flows.

The three major US stock indices rose Friday and posted weekly gains as yields retreated from their peaks following comments from Fed policymakers calming jitters around aggressive rate hikes.

Powell will testify before Congress on Tuesday and Wednesday and investors will be on the lookout for clues on policy outlook after recent strong economic data and hot inflation data fueled bets that the central bank could raise rates to higher-than-expected levels.

“Investors are bracing for Powell’s comments tomorrow and I don’t think he’s going to say much based on what he’s been saying all along. The Fed has basically set the stage for further rate hikes, maybe beyond May and the market does it well.” aware of that,” said Peter Cardillo, chief economist at Spartan Capital Securities in New York.

Traders expect at least three more 25 basis point hikes this year and see interest rates peak at 5.44% in September from 4.67% now.

US equities have become quite volatile in recent weeks after a strong performance at the start of the year as investors factored in the possibility of interest rates staying high for longer. The benchmark S&P 500 (.SPX) is up 5.4% year-to-date, after plunging 19.4% in 2022.

Investors await factory order data for January, expected at 10 a.m. ET, to assess the impact of higher tariffs on the manufacturing sector.

At 9:48 a.m. ET, the Dow Jones Industrial Average (.DJI) was up 58.51 points, or 0.18%, to 33,449.48, the S&P 500 (.SPX) was up 9.61 points, or 0.24%, to 4,055.25 and the Nasdaq Composite (.IXIC) rose 32.73 points or 0.28% to 11,721.74.

Shares of Apple rose 1.9% after Goldman Sachs issued a buy recommendation on the iPhone maker.

US-listed shares of Chinese companies Alibaba and PDD Holdings (PDD.O) fell 0.9% and 2.7%, respectively, after China set a modest annual economic growth target of about 5%, below market expectations. 5.5% plus growth.

Shares of cryptocurrency-related companies fell after Silvergate Capital Corp (SI.N) pulled the plug on its crypto payment network after raising doubts about the company’s ability to stay in business. The California-based bank was down 10.4%, while peer Signature Bank (SBNY.O) was down 1.7%.

The NYSE had more emerging issues than the NYSE at a ratio of 1.06 to 1, while the Nasdaq had more emerging issues at a ratio of 1.17 to 1.

The S&P index recorded 14 new highs in 52 weeks and no new lows, while the Nasdaq recorded 55 new highs and 22 new lows.

Reporting by Sruthi Shankar and Bansari Mayur Kamdar in Bengaluru Editing by Vinay Dwivedi

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