S&P 500 on Track for Another Record as Tech Stocks Rally
By Anna Hirtenstein and Julia Carpenter
The S&P 500 was poised Thursday to set another record,
propelled by a rally in big technology stocks.
The broad market index climbed 0.3% after closing at its 18th
record this year on Wednesday. The tech-laden Nasdaq Composite rose
0.8%. The Dow Jones Industrial Average added roughly 0.04%.
Stocks have started the second quarter on strong footing, with
the S&P 500 rising 2.7% this month. The largest tech companies
have surged ahead as the bond market calmed, easing concerns about
the high valuations of growth stocks.
"Within the market, the big factor so far this year has been
interest rates," said Ed Keon, chief investment officer at QMA. "So
rates going up was part of the reason why you had this broadening
of the market and a bit of a rotation towards value stocks,
especially financials and energy. And now rates have eased off
their highs, you're seeing those sectors underperform and
technology come back into the lead."
At the International Monetary Fund's virtual spring meetings,
Federal Reserve Chairman Jerome Powell expressed concern over
long-term "labor market scarring" and assured continued support for
those out of work due to the pandemic and subsequent recession.
"It's important to remember we're not going back to the same
economy," he said. "This will be a different economy."
Mr. Powell's remarks underscored Fed policy makers' comments,
released Wednesday, that they would continue with easy monetary
policies until the economy has recovered more.
The latest data on jobless claims showed that layoffs rose for a
second week, highlighting the unevenness of the recovery. Worker
filings for initial unemployment benefits rose to 744,000 last
week, from a revised total of 728,000 the prior week. Economists
surveyed by The Wall Street Journal were expecting a decline to
"The dynamic remains supportive for stocks," said Adrien
Pichoud, a portfolio manager and chief economist at SYZ Private
Banking. "The Fed and central banks in general are perceived to be
in no rush to raise rates."
In bond markets, the yield on the 10-year U.S. Treasury note
declined to 1.643%, down from 1.653% on Wednesday. It had climbed
as high as 1.749% at the end of last month. Yields rise when bond
The cooling off in bond yields has led to a revival in the
largest technology stocks' rally. Apple, Microsoft, Amazon.com and
Google's parent Alphabet -- which are the biggest companies by
market value on the S&P 500 -- have each climbed more than 4%
this month after stumbling in March.
In Thursday's session, software companies logged big gains, with
ServiceNow and Autodesk adding 2.9% and 2.4%, respectively. Other
stocks that prospered during lockdown, like Etsy and PayPal
Holdings, climbed as well, rising 5.9% and 2.6%, respectively.
"We consider bond yields to be close to the top, so one of the
barriers to tech has begun to come down," said Seema Shah, chief
strategist at Principal Global Investors. "If there ever was going
to be a test for tech, it would be this environment, with rising
bond yields and the work-from-home trade starting to fade, but tech
has remained really resilient in the face of that."
The consumer staples sector, on the other hand, was a weak spot
Thursday with Constellation Brands dropping 5% and Walgreens Boots
Alliance off 1.7%.
"A lot of them did very well last year as people stayed home and
bought a lot of bleach and other staples," Mr. Keon said. "Now, as
the pandemic eases and the broader economy is clearly showing signs
of great growth, staples tend to be lower beta both to the economy
and to the market, so they have underperformed in that
Overseas, the pan-continental Stoxx Europe 600 ticked up 0.6% on
Thursday, a record close. In Asia, most major benchmarks climbed.
The Shanghai Composite Index added less than 0.1%, and Hong Kong's
Hang Seng Index rose 1.2%.
Write to Anna Hirtenstein at email@example.com and Julia
Carpenter at Julia.Carpenter@wsj.com
(END) Dow Jones Newswires
April 08, 2021 13:19 ET (17:19 GMT)
Copyright (c) 2021 Dow Jones & Company, Inc.