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After two weeks of sluggishness, investors finally stopped worrying about rising inflation and bond yields, and kept bidding up stock prices. As the Dow gained over 700 points in the first three days of the week, it might be a good time to consider that the short-lived panic has evaporated.
The consumer price index rose 0.5% in January and investors wondered if the Fed will increase interest rates due to accelerating inflation, which pushed the 10-year Treasury yield above 2.90%. However, it hardly affected the renewed bullishness in the market as the Dow edged closer to the 25,000 mark once again, as it gained 410 points on Monday.
Bulls managed to keep the bulk of the gains made on Monday throughout the week as a number of Q4 earnings reports beat estimates and continued to demonstrate the robustness of the overall economy.
To sum up, the rising corporate earnings reports from Q4 ensured that market participants do not pay much attention to short-term worries that kept equities bogged down over the last two weeks.
Be sure to check out our previous week’s edition here, in which investors worried about wage growth and accelerating inflation in the economy.