WDC Western Digital Corporation

By Joe Wallace and Paul Vigna 

The S&P 500 closed above 4000 for the first time in its history, setting a record to begin the second quarter.

The broad stock gauge jumped 46.98 points, or 1.2%, to 4019.87, after closing out a fourth consecutive quarterly advance on Wednesday. It took just 434 trading days for the index to set its latest 1,000-point milestone, far fewer than the 1,227 trading it needed to climb to 3000 from 2000.

The Nasdaq Composite rose 233.23 points, or 1.8%, to 13480.11. The Dow Jones Industrial Average added 171.66 points, or 0.5%, to 33153.21.

"There's always some excitement starting a new quarter," said Lindsey Bell, the chief investment strategist at Ally Invest, and having the S&P cross a milestone is another confidence booster. She cautioned, however, that the market can get stuck on these numbers, too. "Lots of times the market has to test that level a few times before it can go higher."

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, fresh spending programs from the Biden administration and earnings expectations. Still, they point to risks stemming from rising bond yields, new lockdowns in Europe and signs of excess in corners of the market.

Over the past year, stocks have risen sharply in expectation of an economic rebound, said Shawn Snyder, a strategist at Citi U.S. Wealth Management. Now that it appears to be here, investors have "Covid jitters," he said, looking warily at inflation expectations and, ultimately, a reversal of Federal Reserve policy.

"We're exiting this Goldilocks situation [for stocks] and wondering if the porridge is too hot," he said.

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.

"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 said he thinks information-technology stocks such as Microsoft and Salesforce.com would provide a cushion if cyclical stocks lose momentum.

Despite the sector rotation in the stock market this year, tech stocks were the biggest drivers of the S&P 500's latest 1,000-point milestone. Five stocks -- Apple, Microsoft, Amazon.com, Facebook and Alphabet -- contributed 44% of the gains, according to S&P Dow Jones Indices.

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.

Although U.S. investors will also been eager to see the March payrolls report Friday morning, they won't be able to trade on the data until Monday, as the equities markets will be closed for Good Friday.

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. Andersen said.

In corporate news, shares of Micron Technology rose $4.20, or 4.8%, to $92.41 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 $4.62, or 6.9%, to $71.37

The yield on 10-year Treasury notes slipped to 1.680% from 1.749% Wednesday, its largest one-day drop since November. 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 rose after the Organization of the Petroleum Exporting Countries and a group of other big producers led by Russia agreed Thursday to add about 350,000 barrels a day in production, with more loosening later this year.

U.S. crude rose 3.9% to $61.45. Analysts expected the cartel to keep output cuts in place to bolster the oil market after a recent slide in prices.

In overseas markets, the Stoxx Europe 600 rose 0.6%, led by tech and real-estate stocks. China's Shanghai Composite Index and Japan's Nikkei 225 both rose 0.7%.

Write to Joe Wallace at Joe.Wallace@wsj.com and Paul Vigna at paul.vigna@wsj.com

(END) Dow Jones Newswires

April 01, 2021 16:58 ET (20:58 GMT)

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