(ATF) Tesla and Apple led a rally in technology stocks on Monday March 22, as Treasury yields fell firmly from recent highs. US Treasury Secretary Janet Yellen and Federal Reserve chairman Jerome Powell begin joint congressional testimony on Tuesday.
Tesla rose by more than 6% after Ark Invest founder Cathie Wood raised her target for the company’s price to $3,000, before giving up some gains later in the day to close up by 2.3% at $640. Apple closed the day nearly 3% higher.
An easing in Treasury yields after a recent sharp increase helped to propel rises in many technology stocks. The benchmark 10-year Treasury close the day at 1.68% after hitting a high of 1.75% last week.
The tech-heavy Nasdaq outpaced the S&P 500 and the Dow, both of which posted all-time highs last week on bets that stimulus and vaccine rollouts will likely lead to the strongest US economic growth since 1983.
Yellen and Powell will testify together to Congress this week and on Monday evening the Federal Reserve released the prepared remarks intended for its head Powell at the first hearing on Tuesday.
“The recovery has progressed more quickly than generally expected and looks to be strengthening,” Powell said. Household spending has risen, he said, and the housing sector has more than fully recovered.
“However, the sectors of the economy most adversely affected by the resurgence of the virus, and by greater social distancing, remain weak, and the unemployment rate — still elevated at 6.2% — underestimates the shortfall, particularly as labour market participation remains notably below pre-pandemic levels,” he said. “The recovery is far from complete, so, at the Fed, we will continue to provide the economy the support that it needs for as long as it takes.”
Powell’s prepared remarks stuck to the tone of cautious optimism he has struck in recent weeks amid indications that a recovery is gaining strength.
Fed policymakers and many private forecasters are expecting a surge in spending and economic growth in coming months as more Americans get vaccinated and venture out. But the Fed last week kept interest rates near zero, where they have been for the past year, and the majority of Fed policymakers continued to see them staying there through 2023.
Lower-wage earners still suffering
Lawmakers will ask Powell about the potential risks from the Fed’s easy policy. That includes buying bonds at a pace of $120 billion a month until the Fed sees “substantial further progress” toward its goals of full employment and inflation.
Powell noted that lower-wage workers, African Americans, Hispanics and other minority groups are among those still suffering.
The Fed Reserve chief said last week it is not time yet to even begin talking about paring the Fed’s bond-buying. Though Fed policymakers expect robust growth to help the labour market, the US economy is still millions of jobs short of where it was before the crisis.
And while policymakers see inflation rising to 2.4% this year as people rush to spend their pent-up savings, those price rises are not expected to continue for long. This may allow the Fed to keep monetary policy easy.
Tuesday’s hearing will mark Powell’s first joint appearance with Treasury Secretary Janet Yellen, his predecessor as Fed chair, since she was confirmed earlier this year. The two will appear before the Senate banking committee on Wednesday.
Powell’s three previous rounds of congressional updates on the Fed’s and Treasury’s pandemic-relief efforts were alongside Steven Mnuchin, who ran the Treasury in the Trump administration.
In this week’s prepared testimony, Powell reiterated the Fed’s commitment to use “our full range of tools to support the economy and to help assure that the recovery from this difficult period will be as robust as possible.”