Before the Bell - The rotation out of so-called growth stocks, a trend in place for the past several weeks, continued yesterday in the early going. That pullback was largely precipitated by another rise in Treasury note yields. The return on this debt instrument moved up to a one-year high of 1.76% in the first hour, or so, of trading, but would back off as the day progressed. Still, even with the easing back in yields (they would be up nominally on the day), the stock market would end the session modestly to the downside.

Meantime, the increase in yields, while hurting growth stocks, helped the financial group, such as the banks. This was all a prelude to trading in the session today, which will bring much-anticipated infrastructure spending details and insight into what potential corporate tax changes that could accompany President Biden's ambitious plan. Also contributing to the rise in Treasury yields was the release of data on consumer confidence from the Conference Board. That survey rose to its highest level in a year.

Returning to the stock market, optimism on the economy and corporate earnings are helping to engender concerns about higher inflation. We think such worries are overblown, but with the massive $1.9 trillion stimulus deal having passed and a large infrastructure bill likely to follow, it is not too much of a stretch to have some inflation fears. As to other news, tomorrow will see the release of data on manufacturing activity and weekly jobless filings, and Friday, even though the market will be closed for Good Friday, will bring the issuance of monthly payroll data.

In corporate news, food maker McCormick & Company (MKC) reported better-than-expected quarterly earnings. But the shares gave ground nonetheless. In other economic news, the day ahead will see the release of data from the Chicago area's purchasing managers and the monthly report on pending home sales. However, the main focus will be on government spending and Treasury yields.

Looking out at the new day, the early read on the stock market was for an uninspiring open, but the futures have since turned and may make some early progress when trading resumes, as the Street awaits the details of the upcoming $2 trillion infrastructure spending proposal and tax law changes.  – Harvey S. Katz, CFA

At the time of this article’s writing, the author did not have positions in any of the companies mentioned.