DJIA: 34,911.20, up 499.51
S&P 500: 4,462.21, up 70.52
Nasdaq: 13,619.66, up 287.30

Stocks and yields climb; oil prices drop

U.S. equities staged a relief rally on Tuesday as Wall Street digested central bank commentary and corporate earnings reports. Depressed sentiment and positioning levels serving as contrarian indicators were widely cited as supportive of risk appetite. The Dow advanced 499 points, turning positive month-to-date. The S&P 500 and Nasdaq Composite each notched their best one-day performance in a month, jumping 1.6% and 2.2%, respectively.

Hawkish remarks from St. Louis Federal Reserve (Fed) President Bullard were in focus, as he said more aggressive 0.75% rate hikes–while not his base case–“should not be ruled out” as a policy tool to quickly move interest rates to a neutral level. Market participants are essentially pricing in a bigger-than-normal 0.50% rate increase at the upcoming May 3-4 policy meeting. A rout in Treasuries deepened, with the yield on the 10-year note up seven basis points (0.07%) to 2.93%, while the 30-year bond yield briefly traded at 3.00% for the first time in three years. The more Fed-sensitive two-year note yield spiked 13 basis points (0.13%) to 2.59%. On the data front, both housing starts and building permits unexpectedly advanced in March, up 0.3% and 0.4%, respectively.

Seven of 11 S&P 500 sectors rose more than 1%, with growth-related stocks outperforming alongside companies benefiting from reopening activity. Energy was the lone laggard as West Texas Intermediate crude slumped 5% to $102.81/barrel. In earnings, Johnson & Johnson climbed 3.1% as a dividend boost helped offset disappointing first-quarter sales. Meanwhile, Travelers Companies Inc. slid 4.9% as a closely watched underwriting metric fell short of expectations, overshadowing an otherwise upbeat report.

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