Stocks were mostly lower in early trading as another tick up in bond yields gave investors pause. Wall Street continues to look to Washington, where economic data, comments out of the Federal Reserve and President Joe Biden’s stimulus package remain front and center.
The S&P 500 index was down 0.6% as of 10:12 a.m. Eastern. The Dow Jones Industrial Average was little changed, at the technology-heavy Nasdaq lost 1.3%.
Banks benefited from the increase in bond yields, which allows them to charge higher rates on mortgages and many other kinds of loans. The yield on the benchmark 10-year Treasury note rose to 1.48% from 1.41%.
Goldman Sachs, Wells Fargo, JPMorgan Chase and Citigroup were all up 1% or more. The KBW Bank Index, a measure of the 24 largest banks, was up nearly 2%.
Treasury yields hit the psychologically important 1.50% mark last week, as investors have braced for stronger economic growth but also a possible increase in inflation.
Despite the rollout of millions of doses of coronavirus vaccines weekly, the U.S. economy continues to struggle. Payroll processor ADP released a report Wednesday showing that private employers created only 117,000 jobs in February, far below economists’ forecasts.
On Tuesday, Federal Reserve Governor Lael Brainard sought to calm financial markets by emphasizing that the Fed, while generally optimistic about the economy, is still far from raising interest rates or reducing its $120 billion a month in asset purchases.
Federal Reserve Chair Jay Powell will speak Thursday on monetary policy as well. Investors heard from him last week when he testified in front of Congress, but the format — a question-and-answer session with The Wall Street Journal — is likely to be more illuminating than Powell’s calculated answers to politicians.
“How much overheating and inflation will the Biden fiscal stimulus generate remains at the top of virtually every market conversation,” analyst Stephen Innes of Axi said in a commentary.
The big piece of data investors will get will be the February jobs report on Friday. Economists surveyed by FactSet expect employers created 225,000 jobs last month, but with the disappointing economic data, investors are likely to dampen their outlooks. The report also includes numbers for how much wages are rising across the economy, a key component of inflation.