Wall Street Monday's afternoon trading saw stocks rise as investors prepare for a week of holiday-shortened trading. Investors are encouraged by the Federal Reserve's leadership.
As of 1:07 p.m. Eastern, the S&P 500 had gained 0.4%. The Dow Jones Industrial Average climbed 208 points or 0.6% to 35,810 while the Nasdaq dropped 0.6%.
The yields on bonds rose steadily. Late Friday, the yield on the 10-year Treasury increased to 1.61% from 1.54%. Gains for the wider market were led by banks, who rely on higher yields in order to charge more lucrative interest on loans. Bank of America increased 3.2%
Solid gains were also recorded by companies that produce household and personal care products. Kroger rose 4.4% and Procter & Gamble rose 1%.
The dollar was also stronger against other currencies. The price of gold, which is a safe haven for investors who feel anxious, dropped 2.3%.
Technology and communication companies both fell. Nvidia chipmaker fell 1.1%, and Alphabet, Google's parent company, lost 1.2%.
Retailers and other businesses that depend on consumer spending lost their early gains and lag the market. Target dropped 2.2%, while Amazon fell 2.5%. These retailers are just days away from the holiday shopping season which typically begins right after Thanksgiving.
The announcement by President Joe Biden that he would nominate Jerome Powell for a second four year term at the Federal Reserve was a relief to the markets. This vote of confidence in Powell’s handling of central banking policies during the severe disruptions caused the coronavirus pandemic.
Brad McMillan is chief investment officer at Commonwealth Financial Network. "Powell getting nod is a sign Biden is keeping the course on monetary policy and the Fed continues to move toward normalizing policy," McMillan said. "The Fed will continue to be a force for stability in monetary matters."
In an effort to support markets and the economy, the central bank will begin to reduce bond purchases that helped to maintain low interest rates. As rising inflation threatens the economic recovery, the central bank is making this move to reduce its support. Investors closely monitor the Fed to determine if rising inflation pressures it to accelerate its plans to reduce bond purchases and raise its benchmark interest rate.
As a result, markets in Asia and Europe were mixed. A resurgence coronavirus epidemics caused some countries to take stricter measures to stop another pandemic.
Investors are likely to receive very few economic updates this week. On Monday, the National Association of Realtors reported that sales of previously occupied homes were surprisingly high in October. On Wednesday, the Commerce Department will release data on October new home sales and data on third quarter gross domestic product.
The Thanksgiving holiday will see markets close in the United States. They will also close earlier on Friday.