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US stocks higher after fall back in prices caused by high bond yields Thursday
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U.S. equity futures traded higher Friday hours before the opening bell after a fall back Thursday when the yield on the 10-year U.S. Treasury note widened to 1.72%, its highest since January 2020.
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Investors are swinging between hopes the rollout of coronavirus vaccines will allow global business and travel to resume and fears of possible inflation caused by government stimulus spending and easy credit.
The market’s pullback undercut some of Wednesday's gains, when the S&P 500 and Dow hit all-time highs after the Federal Reserve said U.S. economic growth should rebound to 6.5% this year — the strongest since the 1980s — and inflation will climb above 2% for the first time in years.
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Chairman Jerome Powell said the Fed will keep rates low even as inflation accelerates. Central banks usually try to restrain price rises by hiking rates. But Fed officials have said the U.S. economy will be allowed to “run hot” to avoid derailing a recovery.
A higher yield can make bonds more attractive, drawing money out of stocks, especially high-priced tech giants that powered last year's market rebound. Apple shares fell 3.4%, Microsoft lost 2.7% and Tesla slumped 6.9%.