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UPDATE: Stocks struggle for direction after best one-day rally in months
Today 9:43 AM ET (MarketWatch)Print
By Mark DeCambre and William Watts

U.S. stocks struggled for direction early Tuesday, with major benchmarks seeing a mixed performance after putting in their best daily gains in months during the previous session as global bond yields halted their rise.

How are stock benchmarks performing?

On Monday (https://www.marketwatch.com/story/dow-futures-rise-280-points-to-start-march-as-benchmark-treasury-yield-hangs-around-1-43-11614602421?mod=market-snapshot), the Dow booked its best daily gain since Nov. 9, the Nasdaq Composite Index registered its best day since Nov. 4, while the S&P 500 finished the session with its best daily gain since June 5.

What's driving the market?

Equity markets looked to take a pause a day after upbeat reports on the strength of the economy and a slight pullback in sovereign bond yields provided some support for risky assets as the outlook for the COVID-19 pandemic improves.

Economically sensitive, cyclical sectors like energy and financials continue to outperform the broader market amid optimism about the coronavirus vaccine rollout. (https://www.marketwatch.com/story/coronavirus-tally-global-cases-of-covid-19-top-1144-million-and-us-death-toll-above-514000-2021-03-02)

Last week's rise in bond yields reflected concerns that the distribution of vaccines from the likes of Johnson & Johnson (JNJ) and other drugmakers, as well as a likely imminent infusion of fresh government spending, will drive up inflation as well as economic growth in the second half of 2021.

Investors are hoping to garner more guidance from Federal Reserve speakers, with Fed Gov. Lael Brainard slated to speak at 1 p.m. Eastern and San Francisco Fed President Mary Daly is set to talk at 2 p.m.

"U.S. markets look set for a weaker open after yesterday's sharp rebound ahead of more jawboning from a number of Federal Reserve policy makers later today," wrote Michael Hewson, chief market analyst at CMC Markets, in a daily research note.

Read:After Australia soothes global market worries, will other central bankers step up? (https://www.marketwatch.com/story/after-australia-soothes-global-market-worries-will-other-central-bankers-step-up-11614636109?reflink=mw_share_twitter)

"The most notable will be permanent Fed board member Lael Brainard whose comments last week almost played down market concerns about the sharp moves higher in long term yields," the analyst wrote. "Given recent volatility markets will be looking for a much stronger pushback lest the US central bank loses control of market expectations."

Meanwhile, concerns about bubbles and overvalued parts of the market were a source of concern for Chinese regulators (https://www.marketwatch.com/story/chinas-top-banking-regulator-warns-of-asset-bubbles-on-wall-street-and-elsewhere-11614676238?mod=home-page). Guo Shuqing, chairman of the China Banking and Insurance Regulatory Commission and Party secretary of the central bank warned at a briefing in Beijing that stock values were disconnected with economic fundamentals in the U.S. and Europe, reported Bloomberg News (https://www.bloomberg.com/news/articles/2021-03-02/china-worried-about-bubbles-in-property-foreign-markets?cmpid=BBD030221_MKTEU&utm_medium=email&utm_source=newsletter&utm_term=210302&utm_campaign=marketseurope&sref=J9GPLx1B) and Reuters (https://www.reuters.com/article/us-china-banks/china-studies-measures-to-manage-capital-inflows-amid-global-financial-risk-idUSKBN2AU080?il=0).

Investors were also focused on developments on the vaccine front. President Joe Biden will announce later Tuesday that Merck & Co. Inc. (MRK) will help make Johnson & Johnson's (JNJ) one-shot COVID-19 vaccine in an unusual agreement between two competitors that could lead to a significant boost in supply, the Washington Post reported (https://www.marketwatch.com/story/president-biden-to-announce-later-tuesday-that-merck-with-help-make-jj-vaccine-washington-post-2021-03-02?mod=mw_quote_news) Tuesday.

Looking ahead, markets may focus on Biden's picks to lead the Securities and Exchange Commission, Gary Gensler, and the Consumer Financial Protection Bureau, Rohit Chopra, who will both participate in confirmation hearings (https://www.marketwatch.com/story/meme-stocks-crypto-and-student-loans-what-to-watch-for-at-sec-cfpb-confirmation-hearings-11614621804) before the Senate Banking, Housing and Urban Affairs Committee.