NASDAQ, S&P 500 Expands on Weaker Inflation and Falling Treasury Yields
Major U.S. indices, NASDAQ, and S&P 500 added to their Tuesday gains, rallying after pedestrian headline inflation for February. In February, inflation expanded as expected, adding 0.4 percent in line with analyst's expectations, causing the stock market to rally and treasury yields to fall.
Receding inflation fears assuage fears of the FED intervening sooner, closing the money taps that prime the stock market. Subsequently, inflation confidence caused treasury yields to contract and the USD to soften, forcing the yellow metal and stocks higher. Still, the impact of the rising consumer price index, if President Biden authorizes the distribution of another round of fat stimulus checks, cannot be discounted. Rising inflation could cause a dump-down in the stock market, weighing down indices that analysts say are overvalued.
Impact on Indices:
Bullish. The U.S. economy is rebounding. The $1.9 trillion stimulus package will catalyze recoveries since a big chunk will end up in the stock market. Additionally, the government's primary focus is on tackling the coronavirus pandemic by administering even more vaccines. It is a net positive for the stock market, especially once there is resumption to normalcy.
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