NEW YORK – Wall Street stocks finished a volatile week mostly lower yesterday as markets weighed inflation worries against expected progress on a United States spending package and coronavirus vaccines.
The yield on the 10-year US Treasury note retreated below 1.5%, but a rise in yields in recent sessions remains a worry point for investors.
The Dow Jones Industrial Average dropped 1.5%, or around 470 points, to finish the week at 30,932.37.
The broad-based S&P 500 shed 0.5% to close at 3,811.15, while the tech-rich Nasdaq Composite Index gained 0.6% to 13,192.34.
Despite yesterday’s gain by Nasdaq, the technology-heavy index is the biggest loser for the week, shedding around 5%. The Dow and S&P 500 are also negative for the week.
The downturn in stocks reflects fears that runaway inflation in a fast-recovering US economy in the second half of 2021 will spur the Federal Reserve to suddenly lift interest rates, raising borrowing costs.
Some leading experts rejected this fear, with Oxford Economics ruing a “misreading (of) the Fed’s reaction function”.
“While inflation will undoubtedly warm up in 2021, it’s unlikely to spiral out of control amid a lingering demand gap in some sectors of the economy and anchored inflation expectations,” it said in an analysis.
The House of Representatives was expected to vote later yesterday on Biden’s US$1.9 trillion (RM7.7 trillion) rescue package to provide additional relief to the coronavirus-ravaged economy. The package will then have to go to the Senate.
Investors have also been cheered by regulatory progress on Johnson & Johnson’s single-dose Covid-19 vaccine, which could be approved for emergency use later yesterday. – AFP, February 27, 2021
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