The 10-year Treasury yield held steady to 1.72% from late Tuesday, though it remains close to its highest level since before the pandemic rocked markets a year ago. COVID-19 vaccinations and massive spending plans by Washington have raised expectations for supercharged economic growth and a possible rise in inflation, which has pushed yields higher.
In his speech in Pittsburgh later in the day, Biden is expected to give details about where he wants to steer federal dollars to rebuild roads, bridges and the electric grid. Such programs could mean gushers of revenue for everything from raw-material producers to electric-vehicle makers.
To help pay for it, though, businesses may be looking at higher corporate tax rates, which would pressure their profits. Some investors also worry that all the spending and borrowing by the U.S. government could eventually lead to even higher interest rates for the economy.
The market’s movements could be volatile through the day as investors close their books on the first quarter of the year. The S&P 500 is on pace for a nearly 6% rise for the first three months of 2021, which would be its fourth straight quarter of gains following its lightning-quick plunge in early 2020 amid pandemic panic.
Within the index, the leaderboard of performance is virtually the mirror image of earlier in the pandemic. Energy producers, financial businesses and industrial companies are now leading the way, all climbing between 10% and 30% this quarter.
They’ve shot higher, along with smaller stocks, on expectations that a return to normalcy for the economy and Washington’s huge spending will mean big jumps in profit later this year. It’s a turnaround from earlier in the pandemic, when they plunged on uncertainty about when airplanes may be full again and burning jet fuel.
Stocks of companies that had been winners in the stay-at-home economy or that had been bid up on expectations for strong growth many years into the future, meanwhile, have lagged. Apple is down 7.3% for the quarter so far, for example, while American Airlines Group is up more than 50%.
Shares of app-based meal delivery service Deliveroo, which saw its business boosted by pandemic lockdowns, tumbled by as much as a third in their U.K. stock market debut on Wednesday.
In European stock markets, the German DAX lost 0.1%, while the French CAC 40 fell 0.4%. The FTSE 100 in London dropped 0.6%.
In Asia, Japan’s Nikkei 225 fell 0.9%, South Korea’s Kospi dipped 0.3% and Hong Kong’s Hang Seng lost 0.7%. Stocks in Shanghai dropped 0.4%.