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Stocks traded higher on Monday, extending last week's gains, as a weaker-than-expected U.S. jobs report boosted prospects for an interest-rate cut from the Federal Reserve. The 10-year Treasury yield is at 4.473% and the two-year at 4.787%, both giving up most of the gains accumulated over the past month. Market attention now is likely to switch back to earnings reports, with highlights this week including Walt Disney on Tuesday and Uber Technologies on Wednesday.Key Events
The stock market's rally continued on Monday as bond yields retreated again.
The Dow Jones Industrial Average was up 176 points, or 0.5%. The S&P 500 was up 1%. The Nasdaq Composite was up 1.2%. The S&P 500 closed above its 50-day moving average for the first time since April 12, which could help reinforce hopes that the recent rebound can stick.
The 2-year Treasury yield fell to 4.822% after soaring north of 5% in recent weeks. The 10-year yield was down to 4.488%.
Stocks have rallied since last week when Federal Reserve Chair Jerome Powell effectively took an interest rate increase off the table and said he believed monetary policy was restrictive enough to eventually bring inflation down to the central bank's 2% target. Such comments, paired with Friday's weaker than expected April jobs report sparked renewed hopes that a rate cut could come before election day.
It was chips stocks and airlines leading the S&P 500 higher, but all but two of the 11 major S&P 500 sectors closed higher.
Without much in the way of economic data in the days ahead, earnings reports and comments from Federal Reserve officials will be top of mind for traders.
Americans saw banks make lending standards tighter for businesses, while demand also fell.
Nearly 20% of all banks reported tightening credit for the widely watched commercial and industrial (C&I) loans category in the first quarter for large and middle-market firms or companies with annual sales of above $50 billion, according to the Federal Reserve's Senior Loan Officer Opinion Survey on Bank Lending Practices published on Monday. C&I loans are only made to a business or corporation. The tightening is up from 14.5% in the prior survey.
Demand also weakened. The survey said 36% of banks reported moderately or substantially weaker demand for C&I loans versus 33% in the prior survey.
Banks received the survey on March 25, and responses were due by April 8, and included data from 66 domestic banks.
When it came to consumers, significant net shares of banks reported tightening standards for credit card loans. For example, 24% of banks said they have increased the minimum required credit score for credit card loans versus 15% in the prior quarter.
The Dallas Fed Banking Conditions Survey index, another poll gauging borrowing landscape, showed loan volumes declined in April after having largely stabilized in the two prior surveys.
The strains come as the federal-funds rate has climbed from around zero percent to a range of 5.25% to 5.5%. The pullback signals banks are getting more conservative with doling out money as the economy stays in an uncertain position.
Stocks were rising in Monday afternoon trading as bond yields retreated.
The Dow Jones Industrial Average was up 152 points, or 0.4%. The S&P 500 was up 0.7%. The Nasdaq Composite was up 0.8%. The S&P 500 was on track to close above its 50-day moving average for the first time since April 12.
The 2-year Treasury yield was down to 4.822% after briefly spiking higher. The 10-year yield was back down to 4.488%.
Navellier & Associates founder Louis Navellier writes that the market has rallied in the wake of Federal Reserve Chair Jerome Powell's press conference on Wednesday, which was more dovish than markets were expecting. A softer-than-expected employment report and solid earnings haven't hurt.
Richmond Federal Reserve President Thomas Barkin echoed Powell's words on Monday when he said the central bank's current stance should bring inflation down even though it's been stickier than expected.
"The AI theme remains intact and it's still an election year which should be heating up soon," writes Navellier. "The Magnificent 7 is a few cents from hitting a new high for the year. The bull market is back."
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