The rollout of coronavirus vaccines has Wall Street anticipating a big rebound for the economy and corporate profits
US stocks shook off a midday slide and ended broadly higher on Wall Street on Tuesday, while Treasury yields kept marching higher amid expectations that the world’s largest economy will pull out of its slump after a powerful recovery sweeps the globe later this year.
The S&P 500 edged up less than 0.1 per cent after flipping between small gains and losses for much of the session. The Dow Jones Industrial Average closed 0.2 per cent higher at 31,068.69 and the Nasdaq composite was up 0.3 per cent.
Markets have been charging higher recently amid a wave of optimism about the future. The rollout of coronavirus vaccines has Wall Street anticipating a big rebound for the economy and corporate profits as daily life starts to return toward normal later this year. Expectations are also rising for another round of stimulus coming for the economy because Democrats are set to soon have control of the White House, Senate and House.
But the gains have been so big that critics say stocks and other investments simply look too expensive. Some measures of value in the stock market are at their priciest levels since 2000, when the dot-com bubble was popping. That includes how much investors are paying for each dollar in profits that a company produces.
Low interest rates and almost nonexistent inflation have been encouraging investors to keep piling into stocks, even though their prices are rising faster than their profits. But longer-term interest rates have begun to pull higher with expectations for more borrowing by the US government, economic growth and possibly inflation in the future. The yield on the 10-year Treasury has climbed to 1.14 per cent, for example. That’s up from 1.12 per cent late on Monday and from less than 0.90 per cent at the start of the year.