What’s driving the market?

In his remarks Tuesday, Powell said the economy remained far off the Fed’s employment and inflation goals, giving no indication a spike in bond yields would prompt the central bank to begin tapering its asset-buying program. Fears the Fed could move to scale back stimulus sooner than anticipated had been blamed for the stock market’s recent wobble, which hit highflying, tech-oriented and growth shares hardest, while stocks more sensitive to the economic cycle benefited.

Read: Here are 3 reasons why the stock market can survive rising bond yields in 2021

“Powell gave another market-friendly speech, maintaining a highly accommodative stance, almost welcoming the move higher in U.S. bond yields as they ‘reflect more confidence in the economy’ and seemed unperturbed by the frothy conditions in financial markets,” said Chris Weston, head of research at Pepperstone, in a note.

“His views on future asset purchases supported risk, suggesting he wanted to see ‘substantial progress’ before tapering,” Weston said.

Bond yields were on the move again Wednesday morning, reversing early gains in stock futures, after the Food and Drug Administration said that Johnson & Johnson’s single-dose COVID-19 vaccine candidate has no unexpected safety concerns, a step that moves the experimental vaccine one step closer to emergency authorization. Signs of an economy that may run hotter than expected are helping drive yields higher.

“I still think good news is good news when it comes to information about vaccines and therapies that are going to help us out of the pandemic,” said Brian Vendig, president of Westport, Connecticut-based MJP Wealth Advisors, in an interview with MarketWatch. “Sometimes good information comes out and markets move down, but we have to keep in mind that the tech sector is 30% of the overall market cap of US equities indices. News like this is good for the other parts of the market that didn’t rally last year.”

Even if tech and other megacap stocks sell off, Vendig said, others, like industrials XLI, materials XLB, and energy XLE, benefit. “It’s a little bit of a rotation.”

Powell will deliver a second day of testimony, this time to a House panel, beginning at 10 a.m. Eastern. Other Fed officials set to make public remarks Wednesday include Gov. Lael Brainard, who will give a guest lecture at Harvard at 10:30 a.m., and Vice Chairman Richard Clarida, who will deliver a speech on the economy to the U.S. Chamber of Commerce at 1 p.m.

Sales of newly constructed houses ran at a 923,000 seasonally adjusted annual rate in January, trouncing the MarketWatch consensus of an 850,000 rate.

Which companies are in focus?

• Shares of Square Inc. SQ were down 8.7% in early trade after the company late Tuesday said surging interest in bitcoin and equities trading among Cash App customers helped more than double revenue for its latest quarter. The company also doubled down on its own interest in bitcoin by announcing a new $170 million purchase of the cryptocurrency.
• Intuit Inc. INTU shares were down 2.2% after the financial-services company reported fiscal second-quarter results late Tuesday.
• Shares of aluminum-products maker Arconic Corp. ARNC ticked lower after it reported a surprise fourth-quarter loss late Tuesday but delivered revenues that were above forecasts.
• Lowe’s Cos. LOW shares fell nearly 4% after the home improvement retailer delivered fiscal fourth-quarter profit and sales that topped expectations, and said it planned to buy back $9 billion worth of its stock this year.
• Shares of Casper Sleep Inc. CSPR fell 6.6% after the mattress company reported fourth-quarter revenue that beat expectations, and a narrower-than-expected losses. 
• Bausch Health Cos. Inc. BHC  shares dipped 0.7% after the pharmaceuticals and medical devices company said it reached an agreement with billionaire activist investor Carl Icahn to add two of his nominees to its board of directors.
• Six Flags Entertainment Corp. SIX shares were up 5.9% after the company reported a wider-than-expected loss for the third straight quarter, but saw fourth-quarter revenue fell less than expected as those who did attend the company’s theme parks spent more than forecast.
• Exxon Mobil Corp. XOM on Wednesday said it had agreed to sell most of its non-operated upstream assets in the U.K. central and northern North Sea to HitecVision for more than $1 billion. Shares gained 1.5%.
• Shares of Johnson & Johnson JNJ added 0.7% after the Food and Drug Administration said the company’s single-dose COVID-19 vaccine candidate has no unexpected safety concerns, moving it a step closer to distribution.

How are other markets performing?

• The yield on the 10-year Treasury note BX:TMUBMUSD10Y  jumped 7 basis points to 1.419% as inflation fears continue to dog markets. Yields and bond prices move in opposite directions.
• The ICE U.S. Dollar Index, DXY  a measure of the currency against a basket of six major rivals, ticked up 0.2%.
• Oil futures were higher, with the U.S. benchmark CL  up 1.4% at $62.56 a barrel, as traders waited for weekly storage data and next week’s OPEC+ meeting. April Brent BRNJ21  rose 1.5% to trade near $66.33. April gold futures GCJ21  slumped 1.5% to $1,785.20 an ounce as yields resumed their upward march.
• In overseas stock trading, the pan-European Stoxx 600 XX:SXXP rose 0.2% and London’s FTSE 100 UK:UKX was virtually unchanged. In Asia, the Shanghai Composite CN:SHCOMP  fell 2%, while Hong Kong’s Hang Seng Index HK:HSI slumped 3%.

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