Stocks Rise After S&P 500 Hits Record
By Joe Wallace
U.S. stocks inched higher and toward new records amid another
volley of blue-chip earnings and more signs of economic growth.
The Dow Jones Industrial Average rose 0.4%, its third straight
day of gains and one day after it hit 34000 for the first time. The
S&P 500 rose 0.2% after posting its 22nd all-time closing high
of 2021 on Thursday. The Nasdaq Composite bucked the trend, down
A strong start to earnings season from banks and other financial
companies has combined with data showing the economy is growing at
a rapid clip to propel stocks higher this week. Adding to the
momentum: A drop in yields on U.S. government bonds that has
surprised some investors in its size and speed.
Shares of Morgan Stanley fell 0.6% even after the investment
bank said profit more than doubled in the first quarter, becoming
the latest Wall Street firm to report a blowout start to the year.
Citizens Financial Group, Bank of New York Mellon, PNC Financial
Services Group and custodian and fund manager State Street also
posted quarterly results.
Data out Friday showing the Chinese economy grew at a record
rate of 18.3% in the first quarter will add to optimism about the
U.S.'s economic prospects, said Remi Olu-Pitan, multiasset fund
manager at U.K. investment firm Schroders.
"Maybe we should notch up our expectations a bit in the U.S. and
even in Europe," she said.
Asian indexes rose on the back of the data. China's Shanghai
Composite Index climbed 0.8%, and Japan's Nikkei 225 edged up
Among other movers in the U.S., PPG Industries rose 12% after
the paint manufacturer said improving industrial demand would boost
profits in the current quarter. DraftKings shares climbed 4.3%
after it was named an official sports betting partner of the
J.B. Hunt Transport Services, considered a transportation
bellwether, gained 4.4% on higher profits and revenue for the first
quarter. Meantime, Alcoa said it expected strong results in the
second quarter, lifting the aluminum maker's shares 9.5%.
Overseas, the Stoxx Europe 600 rose 0.6%, led by shares of banks
and makers of cars and car parts. Daimler gained 2.5% after the
German auto maker said sales of Mercedes-Benz cars would push
first-quarter results above analysts' forecasts.
Shares of Bank of Ireland jumped about 9.3%. The lender said it
had agreed potentially to buy all of KBC Bank Ireland's performing
loans. German meal-kit maker HelloFresh climbed 3.1% after raising
its revenue guidance for 2021.
The yield on 10-year Treasury notes rose to 1.569%, up from
1.531% Thursday but still down from 1.664% at the end of last week.
Yields move in the opposite direction to bond prices. Rising yields
injected volatility into the stock market in the first quarter by
knocking shares of large technology companies.
Daniel Morris, chief market strategist at BNP Paribas Asset
Management, said falling yields call into question some aspects of
the "reflation trade," in which investors bought stocks that stood
to gain from a burst of inflation and economic activity.
Yields have fallen because the Federal Reserve has started to
convince investors that it won't bump up interest rates to ward off
higher inflation, Mr. Morris said. "The Fed's been messaging this
for a while but the market finally seems to be believing it."
Other investors, such as Ms. Olu-Pitan, say yields have fallen
because overseas money managers, especially in Japan, have made
large purchases of U.S. government debt.
Paul Vigna contributed to this article.
Write to Joe Wallace at Joe.Wallace@wsj.com
(END) Dow Jones Newswires
April 16, 2021 10:25 ET (14:25 GMT)
Copyright (c) 2021 Dow Jones & Company, Inc.