By Joe Wallace 

U.S. stocks ticked higher Thursday, signaling gains for technology stocks at the start of the second quarter ahead of a flurry of economic data.

The S&P 500 edged up 0.7% after the broad stocks gauge closed out a fourth consecutive quarterly advance on Wednesday. The Dow Jones Industrial Average gained 122 points, or 0.4%, and the Nasdaq Composite rose 1.3%.

New claims for jobless benefits edged up to 719,000 last week from 658,000 the previous week, data from the Labor Department showed. Economists had expected unemployment claims -- a proxy for layoffs -- to decline. The figures are closely followed by investors seeking to gauge the pace of the economic rebound.

Ahead of the bell, shares of Micron Technology rose 4.5% after The Wall Street Journal reported that the memory-chip maker was exploring a potential deal for Japan's Kioxia. Western Digital -- which the Journal also reported to be circling the Japanese semiconductor company -- also gained 4.5% in premarket trading.

In the broader market, many investors are hopeful that stocks will continue to climb in the second quarter. Their optimism is pegged to the prospect of a surge in economic growth as vaccinations become widespread and fresh spending programs from the Biden administration. Still, they point to risks stemming from rising bond yields, new lockdowns in Europe and signs of excess in corners in the market.

Some are questioning whether the switch out of technology stocks and into economically-sensitive sectors like banks and energy has gone too far. Having powered the broad market higher in 2020, the rally in tech stocks slowed in the first quarter as investors bought into companies that stood to benefit from the economic rebound.

"We are entering a period of time when there is a bit more risk, and for that I want to have a more balanced approach," said Lars Skovgaard Andersen, investment strategist at Danske Bank Wealth Management. Mr. Andersen thinks information-technology stocks such as Microsoft and Salesforce.com would provide a cushion if cyclical stocks lose momentum.

Semiconductor producers and others stand to benefit from President Biden's infrastructure package, he added. Mr. Biden on Wednesday unveiled a $2.3 trillion infrastructure plan centered on fixing roads and bridges, expanding broadband internet access and boosting funding for research and development.

More data due Thursday will give investors clues about the pace of economic growth toward the end of the first quarter. The Institute for Supply Management's March survey of purchasing managers at U.S. factories, due at 10 a.m. ET, is expected to show another solid month for new orders, output and employment.

The yield on 10-year Treasury notes slipped to 1.701% from 1.749% Wednesday. Yields posted their biggest one-quarter rise since 2016 in the first three months of the year, unsettling tech stocks whose valuations had been plumped up by low interest rates.

Some investors think yields are unlikely to keep rising at the same pace.

"The bond market has adjusted now and is at the level appropriate for the coming inflation," said Hans Peterson, global head of asset allocation at SEB Investment Management. "Bond volatility is going down, which is part of feeling more confident in seeing the opportunity in growth stocks."

Oil prices wavered after a meeting of ministers from members of the Organization of the Petroleum Exporting Countries and its partners, led by Russia, got under way. Brent crude, the international energy benchmark, edged up 0.7% to $63.12 a barrel in the London futures market. Analysts expect the cartel to keep significant output cuts in place to bolster the oil market after a recent slide in prices.

In overseas markets, the Stoxx Europe 600 rose 0.4%, led by tech and real-estate stocks. Shares of Atos slid 16% after the French IT company said its auditors had found issues that caused accounting errors at two U.S. subsidiaries.

China's Shanghai Composite Index and Japan's Nikkei 225 both rose 0.7% by the close.

Write to Joe Wallace at Joe.Wallace@wsj.com

 

(END) Dow Jones Newswires

April 01, 2021 09:47 ET (13:47 GMT)

Copyright (c) 2021 Dow Jones & Company, Inc.
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