/Stock Futures Jittery After Monday’s Rally – The Wall Street Journal

Stock Futures Jittery After Monday’s Rally – The Wall Street Journal

U.S. stocks edged lower Tuesday, pausing after Monday’s blockbuster rally as investors continued to digest volatility in both shares and bonds.

The S&P 500 lost 0.2% shortly after the opening bell, pulling back after it surged 2.4% Monday to log its best day since June. The Dow Jones Industrial Average traded essentially flat. Meanwhile, the tech-heavy Nasdaq Composite lost 0.4%.

Investors say their focus is squarely on central bank officials for cues on how monetary policy may shift down the road. That will determine their appetite for government bonds and for inflation-adjusted returns. A flood of easy money by the Federal Reserve since the pandemic hit last spring has helped subdue returns on bonds and fueled a rally in stock markets for much of the past year.

This phenomenon seemed to halt in recent weeks: money managers adjusted their portfolios in anticipation of an economic rebound and a potential increase in inflation, prompting a selloff in government bonds. Yields jumped last week as bond prices fell, leading to jitters in stocks. Bond markets have since stabilized, and stocks surged higher Monday.

“We’re just taking a breather after yesterday,” said Fahad Kamal, chief investment officer at Kleinwort Hambros.

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