NEW YORK, March 9 ― A gauge of global stocks dipped in choppy trading yesterday as investors eyed the yield on US Treasuries for signs of inflation pressures in the wake of the US Senate's passage of a US$1.9 trillion (RM7.8 trillion) stimulus bill.

After climbing as high as 1.613 per cent on the session, the third time above 1.6 per cent in the past year, the US 10-year Treasury yield held near a more than one-year high.

"If rates are grinding higher because people are getting optimistic about what economic growth looks like, that is still supportive for equity prices,” said Tom Hainlin, global investment strategist at US Bank Wealth Management's Ascent Private Wealth Group in Minneapolis.

"It is just if those rates start to get away from you on inflation expectations, then the multiples on stocks come down and there is more concern about that,” he added.

Benchmark 10-year notes last fell 15/32 in price to yield 1.6064 per cent, from 1.554 per cent late on Friday.

Investors have wrestled with whether the stimulus will help global growth rebound faster from the Covid-19 downturn or cause the world's biggest economy to overheat and lead to runaway inflation.

US Treasury Secretary Janet Yellen said yesterday that President Joe Biden's coronavirus aid package will provide enough resources to fuel a "very strong” US economic recovery, and noted "there are tools” to deal with inflation.

Analysts largely expect an acceleration in inflation, stoked in part by the latest climb in oil prices, which yesterday briefly climbed above US$70 for the first time since January 2020.

"Everybody is still concerned that inflation is on the rise. The signs are there for near-term inflation,” said Ellis Phifer, a market strategist at Raymond James in Memphis, Tennessee.

"I don't think it's a long-term inflation issue yet. But near-term, all the signs and pressures are there. And the only thing fighting against it a bit is the stronger dollar.”

On Wall Street, the Dow advanced while the Nasdaq shed over 2 per cent. That marked a more than 10 per cent fall since its February 12 closing high, confirming a correction in the index's value. The technology sector and other richly valued names have been highly susceptible to rising rates.

The Dow Jones Industrial Average rose 306.14 points, or 0.97 per cent, to 31,802.44, the S&P 500 lost 20.59 points, or 0.54 per cent, to 3,821.35 and the Nasdaq Composite dropped 310.99 points, or 2.41 per cent, to 12,609.16.

Shares of banks and automakers lifted European shares as investors continued to move into economy-linked sectors on hopes of a solid rebound from the coronavirus downturn.

The pan-European STOXX 600 index rose 2.10 per cent and MSCI's gauge of stocks across the globe shed 0.57 per cent.

US economic data also pointed to a continued recovery, as the Commerce Department said wholesale inventories increased solidly in January despite a surge in sales, suggesting inventory investment could again contribute to growth in the first quarter.

On foreign exchange markets, the dollar index shot up to a high of 92.341, its highest since November 24.

The dollar index rose 0.565 per cent, with the euro down 0.61 per cent to US$1.1844.

The Japanese yen weakened 0.54 per cent versus the greenback at 108.91 per dollar, while sterling was last trading at US$1.382, down 0.15 per cent on the day.

The jump in yields and the dollar has weighed on gold, which offers no fixed return.

Spot gold dropped 1.2 per cent to US$1,680.69 an ounce after hitting a nine-month low of US$1,678.40.

US gold futures settled 1.2 per cent down at US$1,678.

Oil prices rose after attacks on Saudi Arabian oil sites and the stimulus passage, before reversing course to trade lower on the day.

US crude futures settled down US$1.04, or 1.57 per cent, at US$65.05 per barrel. Brent crude futures settled at US$68.24 per barrel, down US$1.12 or 1.61 per cent. ― Reuters