Stocks flutuated Monday and Treasury yields hovered near one-year highs as investors assessed inflation risks following the passage of the $1.9 trillion relief package for the U.S. economy.
The Dow Jones Industrial Average fell 36 points, or 0.11%, to 32,741. The Dow closed at a record high on Friday.
The S&P 500 was down 0.15%, and the Nasdaq gained 0.19%.
The 10-year Treasury dipped slightly to 1.614% early Monday but remained elevated as investors’ confidence in an economic recovery was boosted by the U.S. aid package and President Joe Biden’s pledge that all Americans would be eligible to receive a COVID-19 vaccine by May 1.
Many traders and economists alike believe inflation will move higher with the additional stimulus. But Treasury Secretary Janet Yellen said U.S. inflation risks remain subdued despite the relief package.
“The most significant risk we face is a workforce that is scarred by a long period of unemployment. People being out of work, not able to find jobs, can have a permanent effect on their well-being. I think that’s the most significant risk,” Yellen said Sunday on ABC’s “This Week. “Is there a risk of inflation? I think there’s a small risk. And I think it’s manageable. “
Fears of rising inflation likely will be on the minds of investors when the Federal Reserve meets this week. Federal Reserve Chairman Jerome Powell has said inflation likely will rise as the economy recovers but thinks it will be temporary.
The Fed’s two-day meeting begins Tuesday. On Wednesday, the central bank will announce its decision on interest rates and Powell will hold a press conference.
The S&P 500 began Monday looking to extend its winning streak to a fifth day. The broad market index rose 2.6% last week, the Dow gained 4.1% and the Nasdaq rose 3.1%.
Oil prices declined Monday following data from China that showed retail sales and industrial output in the world’s second-largest economy surging more than 30% over the first two months of the year, suggesting a powerful start to 2021 following its exit from the coronavirus pandemic late in 2020.
This article was originally published by TheStreet.