US Equities Rally, S&P500 Posts Best Day in Nine Months

02 Mar 2021 · 3rd Party Analysis

US Equities Rally, S&P500 Posts Best Day in Nine Months


In Summary

  • Global stocks rally as renewed optimism spreads across the markets
  • President Biden aims to see his agenda passed this week

US stocks surged on Monday as the advance in Treasury yields came to a halt. Investors were once again feeling confident to return to equities on the first day of March following a weeks-long weak performance in the global markets. The S&P500 had its best day yesterday in almost 9 months as market participants seem to offset fears of rising interest rates and a sharp climb in inflation. The broad stock market index rose 2.38%, or 90.67 points, to a close of 3,901.82, its biggest one-day jump in percentage since June 5.

The Dow Jones Industrial Average climbed 1.95%, or 603.14, to reach a closing of 31,535.51 and the tech-heavy Nasdaq Composite pushed higher by 3.01%, or 396.48, to close at 13,588.83. The gains across US equities marked a quick rebound from last week’s market turmoil when rising government-bond yields weighed on the benchmark indexes which led to losses among tech stocks and the broad market.

The move up on Monday was supported by a slip in the yield of the 10-year Treasury note which dropped to 1.444%. Last week, the yield, serving as a benchmark for borrowing cost in US debt markets, peaked above 1.640%.

Monday’s rally started as soon as the Asian session kicked off the month. The positive sentiment spread from Asian stock markets to European equities, while US futures were eager to open in the green. Investors’ optimism is now back on the table as the much-anticipated Covid-19 fiscal stimulus has moved to the Senate. In addition, the newly authorized Johnson & Johnson vaccine generates more reasons for a positive outlook and a quicker economic recovery.

President Biden Reassess Priorities

US President Joe Biden and Democrats head to Senate this week as the next step to push the stimulus package with a price tag of $1.9tn. On Monday, Senate Democrats decided to exclude the minimum-wage increase to $15, resulting in left-wing frustrations. President Biden agreed to abandon efforts to raise workers’ pay as part of the stimulus and moved on with advancing the rest of the bill. He and his Democratic allies hope they could pass the American Rescue Plan with narrow majorities in both chambers as soon as this week.

Meanwhile, the market is already pricing in the stimulus package and the distribution of the coronavirus vaccine. Cyclical stocks were on the move with the banking sector making significant gains as investors’ jitters have eased. Individual stocks such as Apple, Zoom, and Tesla saw increased buying. All Apple retail stores in the US are open for the first time in almost a year. The milestone boosted Apple shares which rose by 5.4%, the biggest one-session jump in five months. The tech giant closed all its stores at the start of the pandemic. All 270 stores in the US are now open, although some have restrictions.

Zoom, the video-communications company, soared as much as 10% after the closing bell on the fourth-quarter earnings report. The company posted a net income of $260.4 million, or 87 cents a share, a meteoric rise compared to the net income of $15.3 million in the fourth quarter of 2019. Tesla also moved higher on renewed positive sentiment towards the tech sector. The EV maker climbed 6.36% to a close of $718.43.

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