Before the Bell: Wall Street began the holiday shortened trading week on a strong up note with the Dow Jones Industrial Average climbing by 150 points in the first hour of the session. Optimism about the decline in the rate of new COVID-19 infections and hospitalizations and now deaths helped get the ball rolling. A strong up day with across the board advances appeared in the cards. However, the mood quickly shifted, and by noon on the East Coast, the main averages were all in the minus column and a mixed close would follow. Now, this morning, the futures are pointing to another uncertain open, as the bulls seek to regain the upper hand. 

Regarding yesterday's market action, after that uneven morning, the market sought to rally in the afternoon, and the Dow was ultimately successful, gaining 64 points. As before, the bulls were emboldened by hopes for a meaningful stimulus package and better vaccine distribution. Meanwhile, in spite of the mixed final outcome, the Dow, the S&P 500 Index, and the NASDAQ had all secured records during the first part of the session, extending Friday's strong close.

Behind the somewhat weaker final outcome, which saw the S&P 500 ease 0.6%, the NASDAQ lose 0.34%, and the small-cap Russell 2000 shed 0.72%% was a worrisome rise in Treasury note and bond yields. To be sure, Treasury bond yields remain historically low, even with the latest run up. Nevertheless, they did hit their highest point in a year, with the U.S. 30-year bond concluding action at 2.09% and the 10-year Treasury note edged up to 1.30%. Should this uptrend continue, fixed-income instruments could become slight competition for stocks. So far this morning, yields are down slightly.

What is driving yields up for the most part are concerns that a global recovery from COVID-19, such as we believe will be ahead in the next year, will, because of all the spending done by the various governments, contribute to an increase in the rate of inflation. Also heading higher yesterday, along with bond yields, were oil prices, which have hit their foremost level in 13 months. That, too, could start to bring on inflation and higher Treasury bond yields. One final influence on the stock market has been quarterly earnings, which have risen strongly during the latest quarter.

Breaking down the market, sentiment generally remains bullish, largely because of the constructive trends in the vaccine distribution program and the declining incidences of the coronavirus. Meantime, in the economy, there was upbeat news in manufacturing, where February figures for that sector in the New York region rose nicely, surging from January's 3.5 to 12.1 in the current month. The rest of the week also will be a busy one, with data on housing starts due out tomorrow and figures on existing home sales scheduled on Friday. – Harvey S. Katz, CFA

At the time of this article’s writing, the author did not have positions in any of the companies mentioned.