Lower session highs after hitting record highs as Texas deep freeze boosts energy stocks

The sale of hedge funds was not the 'main driver' of the turbulence in the treasury market, as some critics suspected

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US stocks were mostly up Tuesday, with the Dow moving into record territory as investors watched progress toward President Joe Biden‘s $ 1.9 trillion coronavirus relief package and data showing a drop. of COVID-19 cases, which fell to their lowest level in four months on Presidents’ Day. . The energy sector gained the most in the S&P 500, as a nationwide freeze sent natural gas prices skyrocketing and raised crude oil prices. The Dow Jones Industrial Average DJIA, + 0.24% cut its initial gain, but remained above 75.11 points, or 0.2%, at 31,533.51. The S&P 500 SPX Index, + 0.05%, rose 1.03 points to 3,935.86. The Nasdaq Composite COMP, -0.16%, fell 42.02 points, or 0.3%, to 14,053.45. Markets closed in observance of Presidents’ Day on Monday, but before that, the Dow, the S&P 500 and the Nasdaq closed at all-time highs on Friday.

What drives the market? Energy stocks rose 2.4% as natural gas prices soared in response to cold weather that blocked the transport of crude oil and fuel oil, while forcing refineries to temporarily close. Energy problems pushed oil and natural gas prices to their highest levels in months, with West Texas Intermediate CL.1, + 0.66% briefly topping $ 60 a barrel, while Brent oil, the international benchmark BRN00, -0.19%, rose to more than $ 63 a barrel and NG00 natural gas prices, + 4.74%, rose 4% on the day. See: Natural gas prices skyrocket amid frigid US temperatures, while oil prices hit highs in more than a year. Investors are expecting a COVID relief package expected to come next, but close to Biden’s $ 1.9 trillion proposal. “Markets appear more than pleased with this return to ‘normalcy’ as more evidence accumulates that vaccines, improved government support and easy Fed policy pave a clear path for a summer of recovery,” said Christopher Smart, chief global strategist and director of Barings. Investment Institute, in note. Smart said concerns about long-term unemployment or runaway inflation seem “out of place when much of the short term looks good.” But he also said those concerns will eventually take center stage. The House Budget Committee was expected to bring together all components of the Biden administration’s ambitious proposal into a single bill to be voted on by the House before the end of the month. President Nancy Pelosi‘s Democrat-backed aid package includes direct payments of $ 1,400 per person, an expanded child tax credit, aid to state and local governments, and an expansion of unemployment insurance with federal payments of $ 400 per person. week until August. 29, The Wall Street Journal reported. It would also include a gradual increase in the minimum wage to $ 15 an hour, although the wage measure is seen as facing a tough challenge in the Senate, where two Democrats have raised concerns. Meanwhile, the number of COVID-19 cases has been declining. The United States averaged 85,798 new cases per day last week, 41% less than the average two weeks ago. The global count of confirmed COVID-19 cases topped 109 million on Tuesday, according to data aggregated by Johns Hopkins University, while the death toll surpassed 2.4 million. More than 52,000 new cases were reported Monday, compared to 64,938 the day before and 89,727 the week before, but the data may not be reported due to downsizing on weekends and holidays. The decline in viral cases and hopes for additional financial help to help limit the economic damage of COVID-19 comes as a bitter cold snap leaves millions of people, particularly a swath of Texas, in the dark, in the middle of a crippling winter storm that has increased demand for energy assets. The Texas Electric Reliability Council estimated that about 2 million homes were without power Monday. The bond market, meanwhile, was under pressure. The yield on the TMUBMUSD10Y 10-year Treasury note, 1.286%, rose to around 1.29%, from 1.199% on Friday. Yields go up when prices go down. Steady rising returns, reflecting rising borrowing costs and increased competition between the appeal of risk-free fixed income assets compared to stocks, doesn’t appear to be hurting the bullish outlook for stocks at this time. However, investors were watching this dynamic. “The bull market in equities will not be affected if rates rise, as long as the reason for the increase is linked to higher growth expectations,” said Lauren Goodwin, economist and portfolio strategist at New York Life Investments. But he also believes that the real problem for stocks will come when the Fed starts to sound more aggressive, which seems unlikely this year. The New York Fed’s Empire State Trade Conditions Index rose 8.6 points to 12.1 in February, the Fed’s regional bank said Tuesday. This is the highest level of activity since July. Economists had expected a reading of 5.9, according to a survey by The Wall Street Journal. Any reading above zero indicates an improvement in conditions. What actions are focused? Shares of Southwest Airlines Co. LUV, -0.04%, fell 0.4% after the airline revealed its trading update for January and provided a February outlook that showed further improvement. Palantir Technologies Inc. PLTR shares, -11.91%, fell 10.3% after the software and data integration company reported a surprise loss in the fourth quarter, although revenue increased more than expected. Shares of CVS Health Corp. CVS, -4.62% fell 3.8%, after the pharmacy and health benefits company reported fourth-quarter earnings and revenues that beat expectations. Microsoft Corp. MSFT shares, -0.13%, fell 0.5% after Wedbush analyst Dan Ives raised his price target, saying cloud deal activity is reaching its next march growth. What are other markets doing? Japan’s Nikkei 225 NIK Index, + 1.28%, closed 1.3% higher after ending Monday above the 30,000 level for the first time in more than 30 years. Hong Kong’s Hang Seng HSI Index, + 1.90%, rose 1.9%, while operations in Shanghai remained closed for the Lunar New Year holidays. In Europe, the Stoxx 600 SXXP, -0.06% and the London FTSE 100 UKX, -0.11% each fell 0.1%. The ICE US Dollar Index DXY, + 0.06%, a measure of the currency against a basket of six major rivals, was up 0.1%. Gold futures fell as bond yields rose, with the April GCJ21 contract down -1.33% down 0.5% near $ 1,795.10 an ounce.