Stock Markets Inch Up, Building on Recent Gains in the U.S.

All three major indexes climbed last week, with the Dow breaking a four-week losing streak in Stock Markets. The indexes, however, are still down from their recent highs in February, when a string of economic reports suggested that the economy is stronger, and inflation is hotter than many investors had previously believed.

As a result of those reports, many investors are less confident now that the U.S. will enter a recession this year. But they also have become more concerned that the Fed will leave interest rates higher for longer. That has hurt stocks by in part increasing the relative attractiveness of ultrasafe assets such as U.S. Treasury bills.

It has also raised anxieties that a ramped-up effort by the Fed to bring down inflation might ultimately cause a more painful recession down the road, crimping corporate earnings when a downturn finally does arrive.

“Markets have been, and today are still, in a tug of war between hope and dread as to what the Fed might say or do,” said Brian Jacobsen, senior investment strategist at Allspring Global Investments.

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Investors are eagerly anticipating Mr. Powell’s testimony before Congress on Tuesday and Wednesday because they will be his first public remarks since government agencies reported higher-than-expected inflation data last month. In recent appearances, Mr. Powell has struck relatively optimistic notes that inflation—while still too high and coming down only slowly—is finally in the process of easing toward the Fed’s 2% annual target.

Investors will be watching to see whether last month’s data has significantly altered Mr. Powell’s view. Then on Friday, employment data will provide the most important look yet at how the economy developed in February, with investors counting on a slowdown from the torrid pace of job gains that were reported for January.

“It’s the calm before the storm,” said Fahad Kamal, chief investment officer at Kleinwort Hambros.

Technology stocks helped pull indexes higher Monday.

Apple’s stock climbed 2.5%, making it the best performer among the Dow industrials. On Sunday, Goldman Sachs analysts started coverage of the shares with a buy rating and a $199 12-month price target that is among the Street’s highest. Shares traded Monday around $155.

Mining and energy stocks were among the worst performers after China set an economic growth target for this year at 5%, the lowest in more than a quarter century. Shares in copper and gold miner Freeport-McMoRan fell 2%, while oil services giant Halliburton dropped 0.6%.

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“I think some were surprised by the growth target not being punchier,” said Arun Sai, multiasset strategist at Pictet Asset Management. “China wants to focus on stability and sustainable growth rather than growth at any cost.”

Easing pressure on Stock Markets, the yield on the benchmark U.S. Treasury note held onto most of its declines from Friday after it had climbed back above 4% earlier in the week.

In recent trading, the 10-year yield was 3.977%, according to Tradeweb, compared with 3.962% Friday and 4.072% Thursday, its highest close since early November. Many stock fund managers view the 10-year Treasury note as a benchmark risk-free investment. That causes them to reevaluate the prices of Stock Markets when the 10-year yield stages major gains or losses or crosses key thresholds. Yields fall when bond prices rise.

In Europe, the Stoxx Europe 600 fell less than 0.1% after two sessions of gains. Brent crude, the global oil benchmark, rose 0.2% to trade at $85.98 a barrel.

In Asia, major stock benchmarks were mixed. The Shanghai Composite Index lost 0.2%, Hong Kong’s Hang Seng Index climbed 0.2%, and Japan’s Nikkei 225 rose 1.1%.

The Bank of Japan’s next policy decision is due Friday. There is a higher chance of a policy change because it will be Gov. Haruhiko Kuroda’s last meeting, some investors said.

“This meeting is significant, he may do something before he leaves,” said Mr. Kamal at Kleinwort Hambros.