U.S. stocks extend gains as treasury selloff eases

U.S. stocks rose for a second day in a row as a bond selloff eased, bringing some respite for markets whipsawed in recent weeks by concerns about tightening monetary policy.

U.S. stocks rose for a second day in a row as a bond selloff eased, bringing some respite for markets whipsawed in recent weeks by concerns about tightening monetary policy.

All 11 major industry groups in the S&P 500 advanced after Tuesday’s broad-based rally, with tech stocks now having recovered almost half of their losses this year. Megacaps led the Nasdaq 100 higher, with dip-buying seen in Facebook parent Meta Platforms Inc. after a four-day slide wiped about a third off its market value. 

The 10-year U.S. Treasury yield retreated from levels last seen in 2019, and yields across Europe also fell after France’s central banker said markets may be getting ahead of themselves in pricing rate hikes for this year. A dollar gauge slipped.

Investors are weighing still-robust earnings against worries about a rapid withdrawal of pandemic-era stimulus. About 76 per cent of the 317 S&P 500 firms that have reported results beat earnings estimates, with profits coming in more than 6 per cent above projected levels. But data this week is expected to show U.S. inflation continues to overheat, potentially stoking bets on a more aggressive Federal Reserve liftoff in March. 

“Investors certainly appear encouraged by the fact that the falling-knife period looks to be in the rear-view mirror and we’re now seeing signs of stabilization,” Craig Erlam, a senior markets analyst at Oanda, said in a note. “Of course, that could change quickly if the inflation outlook worsens, and we won’t have to wait long for the next hurdle on that front, with the U.S. CPI data being keenly anticipated.”