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The Market Wrap for March 19: The Stimulus Pushes, Higher Yields Pull Back

Traders may be starting to feel a little seasick these days. As with previous weeks this year, volatility is here to stay. At first traders cheered the stimulus measures now enacted. With consumers receiving the first round of direct deposit checks for $1,400, extended unemployment benefits and other economic programs, traders were hopeful that the economy would be getting back on track. Positive vaccine news added to the optimism this week.

However, traders continue to fret over rising bond yields and overall increasing inflation. The yield on the 10-year Treasury bond continued to rise this week, putting pressures on leading growth stocks. Several days this week, once again, featured heavy selling pressures in technology, healthcare and other high-growth sectors.

Positive economic data and earnings also helped create this “push and pull” scenario on the street. Key measures in consumer, labor and manufacturing health painted a brighter picture for the economy. But they also boosted inflation expectations.

The Federal Reserve was also a major factor in the week’s volatility. Key speeches and its latest take on interest rates pointed to a supportive environment for stocks. However, that environment continued to play on the Fed’s new inflation-targeting stance.

All in all, the week featured more record highs as well as plenty of large swings.

Be sure to check out our previous Wrap here, when stocks surged due to the stimulus efforts.

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