As traders appeared to applaud remarks made by Federal Reserve Chairman Jerome Powell that indicate to faster-than-expected economic growth, stocks rose on Friday.
After reaching session highs of more than 300 points, the Dow Jones Industrial Average gained 330 points, or 1%. The tech-heavy Nasdaq Composite rose 1.1%, while the S&P 500 increased by approximately 0.9%.
Powell did not make it obvious where he thinks interest rates would go, therefore Quincy Krosby, head of global strategy at LPL Financial, cited the trend of rising Treasury yields as a major factor influencing market direction. After the chairman’s speech, the yield on the standard 10-year Treasury note increased by over 2 basis points to 4.253%.
Whatever the cause of rising yields, according to Krosby, they always tighten financial conditions since the cost of capital rises.
Undoubtedly, the Fed chair had stated that the institution was ready to increase rates further to fight inflation.
Source (CNBC)
