Wall St pares gains with Powell testimony, upcoming data in focus

March 6 (Reuters) – Wall Street’s major indexes pared early gains on Monday and U.S. Treasury yields rose as investors braced for this week’s testimony from Federal Reserve Chair Jerome Powell and economic data including the jobs report.

Shares of iPhone maker Apple Inc (AAPL.O), last up 2%, were the biggest boost for the S&P 500 index (.SPX) after Goldman Sachs initiated coverage with a “buy” rating.

But equities lost earlier gains as yields on U.S. 10-year Treasury notes rebounded from an early decline after data showed new orders for U.S.-manufactured goods fell less than expected in January. Higher orders for machinery and a range of other products pointed to manufacturing regaining its footing, although civilian aircraft bookings fell.

Rising bond yields tend to weigh on equity valuations, particularly those of growth and technology stocks, as higher rates reduce the value of future cash flows.

Monday’s data likely dampened investor enthusiasm, said Shawn Cruz, head trading strategist at TD Ameritrade in Chicago.

“The market pullback was because there is still a lot of work to do on inflation,” said Cruz. “We’re not seeing the type of demand slowdown we need to see. The whole point of the Fed hiking rates is to slow down the economy.”

The Dow Jones Industrial Average (.DJI) rose 45.24 points, or 0.14%, to 33,436.21; the S&P 500 (.SPX) gained 10.67 points, or 0.26%, at 4,056.31; and the Nasdaq Composite (.IXIC) added 31.23 points, or 0.27%, at 11,720.23.

Six of 11 major S&P 500 sectors rose. But the commodity-linked materials sector (.SPLRCM) led decliners after China set a lower-than-expected target for economic growth this year at around 5%.

The technology sector (.SPLRCT) was the top gainer, with the biggest boost from Apple followed by Microsoft Corp (MSFT.O) and Google parent Alphabet Inc (GOOGL.O).

The three main U.S. stock indexes had rallied on Friday and notched weekly gains after comments from Fed policymakers calmed jitters around aggressive rate hikes.

But San Francisco Federal Reserve Bank President Mary Daly said on Saturday that if inflation and labor market data continue to come in hotter than expected, interest rates would need to go higher and stay there longer than Fed policymakers had projected in December.

Investors will look for clues about the Fed’s future rate hiking path when Powell testifies before Congress on Tuesday and Wednesday. Since Powell last spoke strong economic data and hotter than expected inflation have raised concerns the Fed will raise rates higher than expected or keep them higher for longer.

Traders expect at least three more 25-basis-point hikes this year and see interest rates peaking at 5.44% by September from 4.67% now.

Shares of cryptocurrency-related companies fell after Silvergate Capital Corp (SI.N) pulled the plug on its crypto payments network, raising doubts about the company’s ability to stay in business. The California-based bank, which was last up 1% at $5.84, had fallen as low as $5.11. Its cryto peer Signature Bank (SBNY.O) was down almost 2%.

Declining issues outnumbered advancers on the NYSE by a 1.46-to-1 ratio; on Nasdaq, a 1.79-to-1 ratio favored decliners.

The S&P 500 posted 20 new 52-week highs and one new low; the Nasdaq Composite recorded 74 new highs and 71 new lows.

Reporting by Sinéad Carew, Sruthi Shankar, Bansari Mayur Kamdar and Shristi Achar A in Bengaluru; Editing by Vinay Dwivedi, Anil D’Silva and Richard Chang

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