Stocks Rise, Led by Tech Shares
April 01 2021 - 10:49AM
Dow Jones News
By Joe Wallace
U.S. stocks resumed a familiar pattern Thursday, with tech
shares rising sharply and outpacing the rest of the market.
The Nasdaq Composite rose 1.7%, following a 1.5% gain on
Wednesday. The S&P 500 was up 0.8%, after the broad stocks
gauge closed out a fourth consecutive quarterly advance on
Wednesday, while the Dow Jones Industrial Average was up 0.2%.
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 amid widespread vaccinations 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 of the market.
Some are questioning whether this year's rotation 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.
That thinking was evident Thursday morning.
"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.
On the economic front, 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.
The Institute for Supply Management's March survey of purchasing
managers at U.S. factories was better than expected, showing
another solid month for new orders, output and employment. The
March PMI came in at 64.7, higher than the projected 61.7.
That is another welcome sign for the economy. On Wednesday,
President Biden unveiled a $2.3 trillion infrastructure plan
centered on fixing roads and bridges, expanding broadband internet
access and boosting funding for research and development.
Semiconductor producers and others stand to benefit from President
Biden's infrastructure package, Mr. Anderson said.
In corporate news, shares of Micron Technology rose 5.9% 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 -- gained 6.4%.
The yield on 10-year Treasury notes slipped to 1.696% 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.
Thursday's moves bolstered investors who 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 0.5%, led by tech
and real-estate stocks. Shares of Atos slid 15% 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%.
Write to Joe Wallace at Joe.Wallace@wsj.com
(END) Dow Jones Newswires
April 01, 2021 10:34 ET (14:34 GMT)
Copyright (c) 2021 Dow Jones & Company, Inc.
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