NEW YORK (Pakistan Point News / Sputnik - 09th February, 2022) Wall Street's Dow Jones Industrial Average and� S&P 500 indexes gained their most in a week on Tuesday as industrial stocks rose on signs that the US economy was turning the corner on the coronavirus pandemic, while banking counters profited from bets the Federal Reserve will be aggressive with upcoming rate hikes.
The three major US equity indices ended up between 0.8% and 1.3%. The Dow and the S&P 500 had their biggest daily advance since January 31 while the Nasdaq had its largest gain since February 4.
"It's been a wild start to the year and it seems investors are embracing the less intense start to the week, probably with an eye on what's to come over the next couple of days," Craig Erlam, analyst at online trading platform OANDA, said. "Recent weeks have brought so much anxiety to financial markets as yields have accelerated higher in anticipation of a series of rate hikes from central banks."
The yield on the US 10-year bond, a so-called measure of real interest rates, hit a two-year high of nearly 2% on Tuesday, indicating the Federal Reserve might be more hawkish by the time the first pandemic-era rate hike lands, likely in March.
The Federal Reserve had been initially expected to raise interest rates by a quarter percentage point in March, although some traders think that a half-percentage point increase could not be ruled out.
Tuesday's gain in stocks also came ahead of the Consumer price Index reading for January, due on Thursday.
The US economy grew 5.7% last year from a 3.5% contraction in 2020. But the CPI, a key barometer for inflation, jumped 7% in the year to December, growing at its fastest since 1982. The Federal Reserve's own tolerance for inflation is a mere 2% a year.
