Stocks Rise, Pointing to Extended Tech Gains
April 01 2021 - 10:02AM
Dow Jones News
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)
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