FX.co ★ US stocks rebound, with DJIA hitting another record high

During the trading session on Wednesday, stock indices started their confident rally after US Federal Reserve Chairman Jerome Powell announced that the central bank would maintain a loose monetary policy stance in the long term.

Thus, by the end of the trading day, the Dow Jones Industrial Average climbed 1.3% to 31,961.86, posting the tenth closing high in 2021. Earlier in the session, the index crossed the 32,000 mark for the first time.

The S&P 500 rose 1.1% to 3925.43, while the Nasdaq Composite added 1% to 13,597.97. The Russell 2000 Index soared 2.4% to 2,284.38.

After slipping in early trade, at midday the main indicators saw positive dynamics amid Powell's second speech in the Senate. The chairman of the Federal Reserve System confirmed his intention to maintain ultra-low interest rates and the asset purchase program, as well as dispelled multiple inflationary concerns.

Equity markets, which started the year with gains, have been trading in an extremely uncertain manner lately, while popular stocks in the tech sector have been suffering losses. According to analysts, many investors today prefer to lock in their profits, and it definitely makes sense. A sudden spike in US Treasury yields, caused by expectations of a faster economic rebound, has exacerbated an outflow of funds from the tech sector. Notably, the technological industry was the leading one during the COVID-19 pandemic.

Thus, the recent situation on the American stock exchanges can be attributed to the economic activity which has returned to normal. Yields on US Treasury bonds are sharply rising amid higher vaccination rates in the US and UK. At the same time, we can see a move away from stocks that benefited from the self-isolation regime and a return to assets that sagged during the peak of the coronavirus pandemic.

The yield on the benchmark 10-year Treasury note surged to the highest level in nearly a year this week. On Wednesday, this indicator increased to 1.43%. However, at the end of the trading day, it slipped to 1.388% against 1.363% on Tuesday.

As for US statistics, new home sales increased by 19% on an annual basis in January. The final figure turned out to be significantly higher than predicted. At the same time, there are fears that a rise in lumber prices could cause further house price increases, overlapping low rates on mortgages.

The value of the main digital coin - bitcoin - added 1% to $48,526 after dropping by 13% the day before. By the way, most of the cryptocurrencies that lost in value on Tuesday also reported gains on Wednesday.

The pan-European Stoxx Europe 600 rose by 0.5% on the back of favorable macroeconomic statistics from Germany. Thus, the FTSE 100 index advanced by 0.5%, the DAX - 0.8%, and the CAC-40 - 0.3%. Germany's gross domestic product grew by 0.3% in the fourth quarter compared to the third quarter, while economists predicted just a 0.1% increase.

Stock indices of the Asia-Pacific region edged lower. The Hong Kong market suffered the biggest losses, where the authorities moved unexpectedly to raise taxes on share trading due to the boom in the markets. The main Hang Seng index dipped 3%.