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Investing.com — U.S. stock markets opened the week at new record highs, building on the confidence given by a third-quarter earnings season that for the most part has seen companies continue to churn out cash as the global economic recovery from the pandemic continues.
By 9:45 AM ET (1345 GMT), the Dow Jones Industrial Average was up 157 points, or 0.4%, at 35,977 points, having earlier traded above 36,000 for the first time. The Dow was outperforming the two other main indices, as the S&P 500 and the Nasdaq Compositve notched a gain of only 0.2% each.
The moves come at the start of a week likely to be dominated – both in the U.S. and further afield – by central banks. The Federal Reserve is widely expected to announce the phase out of its $120 billion in monthly bond purchases on Wednesday, while the central banks of Australia and the U.K. are also both expected to tighten policy at their meetings. Analysts at Goldman Sachs (NYSE:GS) said over the weekend that they now expect the Fed to start raising interest rates as early as July next year, a year earlier than they had previously expected.
Similar shifts in expectations have driven two-year bond yields to their highest in 20 months, creating a flatter yield curve that typically signals an economic slowdown ahead. However, the continued momentum of many cyclical stocks, illustrated again on Monday by the Dow’s outperformance, has once again underlined that the post-pandemic recovery is not a typical business cycle.
Cyclicals were benefiting at the expense of megacap tech names in early trading, with Apple (NASDAQ:AAPL) stock, Amazon (NASDAQ:AMZN) stock and even Alphabet (NASDAQ:GOOG) stock falling by over 1% each. While the first two had produced underwhelming numbers last week for the three months through September, Alphabet had soundly beaten expectations thanks to sustained growth in advertising revenue.
