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Market Snapshot: Nasdaq tops 14,000 while Dow comes off lows as bond yields slide

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U.S. stocks traded mostly higher Tuesday, led by gains in technology shares as long-term government bond yields retreated despite data showing a surge in consumer prices in March.

Investors also contended with some negative news on the pandemic front after U.S. public-health agencies requested a temporary halt in the use of Johnson & Johnson’s one-shot COVID vaccine out of “an abundance of caution” due to extremely rare blood-clotting issues in women.

How are stock benchmarks trading?
  • The Dow Jones Industrial Average
    DJIA,
    -0.20%

    were trading 30 points lower at around 33,715, a decline of 0.1%.
  • The S&P 500 index
    SPX,
    +0.33%

    climbed 18 points at 4,147, or up 0.5%.
  • The Nasdaq Composite Index
    COMP,
    +1.05%

    rose 160 points, or 1.2%, to 14,010.

On Monday, the Dow slipped 55.20 points to close at 33,745.40, a decline of 0.2%; the S&P 500 gave up less than a point to finish at 4,127.99; while the Nasdaq Composite declined 50.19 points, ending at 13,850.00, a loss of 0.4%.

What’s driving the market?

Technology stocks were on the rise as bond yields continued to slip on Tuesday. A successful auction for 30-year government bonds in the afternoon showed that demand for U.S. Treasury debt was returning, aided by the Federal Reserve’s messaging that its monetary policy will stay accommodative.

“Bond yields have mostly stabilized, setting the stage for strong stock markets and some rotation back to longer-duration technology issues. The Fed’s reassurance also seems to have had its intended effect on markets that mostly shrugged off the recent PPI and CPI data releases,” said  Scott Knapp, chief market strategist at CUNA Mutual Group.

Blue-chip stocks lagged, however, after the two leading U.S. federal public health agencies, the Food and Drug Administration and Centers for Disease Control and Prevention called for an immediate pause in the use of the Johnson & Johnson’s
JNJ,
-1.34%

COVID-19 vaccine, after six women recipients in the U.S. developed a rare disorder involving blood clots within six to 13 days after being vaccinated.

The news had a modest impact on the investment mood on Wall Street, but may be a reminder of some of the challenges of reopening the economy from the worst pandemic in more than a century.

“Fortunately, the U.S. vaccination rollout is well underway, so the downside effect on both oil and U.S. stocks should be fairly limited,” wrote Stephen Innes, chief global strategist at Axi. He added that with the stock market near records, it has been sensitive to negative headlines.

So far, nearly 7 million Americans have received J&J shots, and about 9 million more have been delivered to states, CDC data show. Scientists from the FDA and CDC will jointly investigate possible links between the vaccine and the clotting disorder and determine whether it should continue to be used or limited. 

The J&J vaccine, which showed 66.1% efficacy in preventing moderate to severe disease, had been seen as a game-changer for getting Americans rapidly vaccinated. J&J’s shot was the third cleared for use in the U.S., behind the two-shot Pfizer
PFE,
+0.51%

and Moderna
MRNA,
+7.40%

vaccines.

The vaccine report comes as the U.S. is facing a new rise in COVID cases, with reports of 70,000 new coronavirus infections per day, according to data from Johns Hopkins University. That is even after hitting a single-day vaccine record of 4.6 million shots on Sunday. Michigan has been advised by the CDC to “close things down” to help address the country’s worst coronavirus outbreak.

The economic rebound has been closely tied to the U.S. vaccination effort and its work getting children back in schools.

Federal Reserve Bank of St. Louis President James Bullard on Monday said that that although it was too early to talk about dialing back the central bank’s accommodation, he said that getting 75% or 80% of people vaccinated might signal that it is time to taper the Fed’s bond purchases.

Meanwhile, data showed U.S. consumer prices rising in March for the fourth month in a row, with the pace of inflation hitting the highest level in 2½ years. The rate of inflation over the past year shot up to 2.6% from 1.7% in the prior month, marking the highest level since the fall of 2018.

Fed officials have emphasized that they are willing to keep benchmark interest rates near 0% even if inflation starts to rise because policy makers think it will be transitory. However, market participants have expressed some skepticism of the central bank’s inflation outlook.

See: Fed doesn’t see inflation running out of control, Harker says

Which companies are in focus?
  • Nvidia Corp.’s
    NVDA,
    +3.09%

    stock traded at record highs Tuesday as analysts hiked price targets and applauded the chip maker’s plans to branch out into its rivals’ territory.
  • Shares of J&J were down1% after the FDA and the CDC called for an immediate pause in the use of its COVID-19 vaccine on Tuesday “out of an abundance of caution.
  • Boeing Co. 
    BA,
    +1.50%

    shares were up 1.6% after it reported delivering 77 commercial airplanes in the first quarter, which is 54% more than the number delivered in the first quarter of 2020.
  • Investors may also be watching a report on inflation and news that Singapore-based Grab Holdings Inc. is going public through a merger with special-purpose acquisition company Altimeter Growth Corp. AGC. Altimeter’s shares gained nearly 13%.
  • Nike Inc.  
    NKE,
    -2.27%

    shares fell 2.1% after it detailed a program that will give a “second life” to returned shoes, an effort to address the consumer concern over climate change and environmental degradation.
How are other assets faring?
  • The ICE U.S. Dollar Index DXY, a measure of the currency against a basket of six major rivals, was down 0.3%.
  • U.S. crude
    CL.1,
    +1.19%

     for May delivery
    CLK21,
    +1.19%

     rose 38 cents, or 0.6%, to settle at $59.70 a barrel on the New York Mercantile Exchange.
  • The 10-year Treasury note yield TMUBMUSD10Y shed 4 basis points to 1.63%. Bond prices move inversely to yields.
  • Gold futures finished higher, with the June contract
    GCM21,
    +0.73%

    climbing $14.90, or 0.9%, to settle at $1,747.60 an ounce on Comex.
  • In Europe, the Stoxx 600 index SXXP ended 0.1% higher, while London’s FTSE 100 UKX finished flat.
  • In Asia, the Shanghai Composite SHCOMP finished 0.1% lower, Hong Kong’s Hang Seng HSI closed down 0.2%, and Japan’s Nikkei 225 NIK rose 0.7%.

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