Wall St pares Powell testimony, upcoming data focus

  • China’s 5% growth target ATR, drag on commodity stocks
  • Apple rises as Goldman initiates coverage with ‘buy’
  • Crypto shares fall as Silvergate shuts down payments network
  • Factory orders fall in January
  • Indexes Up: Dow 0.14%, S&P 0.26%, Nasdaq 0.27%

March 6 (Reuters) – Wall Street’s major indexes pared early gains on Monday and U.S. Treasury yields rose as investors braced for economic data including testimony from Federal Reserve Chairman Jerome Powell this week and a jobs report.

iPhone maker Apple Inc ( AAPL.O ), which rose as much as 2% last week, was the biggest boost to the S&P 500 index ( .SPX ) after Goldman Sachs initiated coverage with a “buy” rating.

But stocks gave up earlier gains as the yield on the US 10-year Treasury note recovered from an early slide after data showed new orders for US manufactured goods fell less than expected in January. Higher orders for engines and other products pointed to manufacturing picking up again, even as civilian aircraft bookings fell.

As higher rates reduce the value of future cash flows, rising bond yields weigh on equity valuations, particularly growth and technology stocks.

Correlation between the S&P 500 and 2-year Treasury bond yields

Monday’s data could dampen investor enthusiasm, said Shawn Cruz, chief trading strategist at TD Ameritrade in Chicago.

“There’s still a lot of work to be done on inflation,” Cruz said. “We don’t see the demand slowdown we need to see. The whole point of the Fed raising rates is to slow the economy.”

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The Dow Jones Industrial Average (.DJI) rose 45.24 points, or 0.14%, to 33,436.21; The S&P 500 (.SPX) added 10.67 points, or 0.26%, to 4,056.31; And the Nasdaq Composite (.IXIC) added 31.23 points, or 0.27%, to 11,720.23.

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Six of the 11 major S&P 500 sectors rose. But the commodity-linked goods sector ( .SPLRCM ) slumped after China set a lower-than-expected target for economic growth of around 5% this year.

The technology sector ( .SPLRCT ) was the biggest gainer, with a big boost from Apple followed by Microsoft Corp ( MSFT.O ) and Google parent Alphabet Inc ( GOOGL.O ).

All three major U.S. stock indexes rallied on Friday and posted weekly gains after comments from Fed policymakers eased jitters surrounding aggressive rate hikes.

But San Francisco Federal Reserve Bank President Mary Daly said on Saturday that if inflation and labor market data come in higher than expected, interest rates should be higher in December than Fed policymakers forecast.

Investors will be looking for clues about the Fed’s future rate hike path when Powell testifies before Congress on Tuesday and Wednesday. Powell’s recent talk of strong economic data and warmer-than-expected inflation has raised concerns that the Fed will raise rates more than expected or keep them higher for longer.

Traders expect at least three 25-basis-point hikes this year and interest rates to 5.44% by September from 4.67% now.

Shares of cryptocurrency-related companies fell after Silvergate Capital Corp ( SI.N ) shut down its crypto payment network, raising doubts about the company’s ability to stay in business. The California-based bank was last up 1% at $5.84, down from $5.11. Its crypto peer Signature Bank ( SBNY.O ) fell nearly 2%.

Declining issues outnumbered advancers by a 1.46-to-1 ratio on the NYSE; On the Nasdaq, a 1.79-to-1 ratio favored decliners.

S&P 500 hits 20 new 52-week highs and a new low; The Nasdaq Composite posted 74 new highs and 71 new lows.

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Reporting by Sinead Carew, Shruti Shankar, Bansari Mayur Kamdar and Sristi Achar A in Bangalore; Editing by Vinay Dwivedi, Anil de Silva and Richard Chang

Our Standards: Thomson Reuters Trust Principles.

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