Tech cos gains help lift S&P 500 to record high
Dow also at all-time high
NEW YORK, April 9, (AP): Wall Street capped another week of gains with more milestones Friday, as strength in technology and health care stocks helped push the S&P 500 and Dow Jones Industrial Average to all-time highs.
The S&P 500 rose 0.8% for its fourth record high this week and third straight weekly gain. The Dow’s latest milestone followed an all-time high on Monday.
Stocks have benefited this week as bond yields, which had been steadily ticking higher, retreated from highs hit earlier in the month. Higher yields can slow down the economy by pushing up interest rates, making it more expensive for people and businesses to borrow money. Bond yields rose Friday, but that didn’t weigh on stocks.
“The S&P 500 finished at another all-time high today as investors have become comfortable enough with the current level of interest rates and inflation to keep putting money into equities,” said Chris Zaccarelli, chief investment officer for Independent Advisor Alliance.
A late-afternoon burst of buying pushed the major stock indexes higher. The S&P 500 rose 31.63 points to 4,128.80. The Dow gained 297.03 points, or 0.9%, to 33,800.60. The Nasdaq composite picked up 70.88 points, or 0.5%, to 13,900.19.
Small company stocks, which have outgained the broader market this year, lagged behind on Friday. The Russell 2000 index of smaller companies inched up 0.88 points, or less than 0.1%, to 2,243.47. Still, the index is up 13.6% so far this year, while the S&P 500, which tracks large companies, is up 9.9%.
Big Tech stocks were among the better performers. Apple rose 2%, Microsoft gained 1% and Intel added 1.8%. Health care companies also helped lift the market. UnitedHealth climbed 3.1% and Cigna rose 3.3%.
Financial companies also rose, aided by the rise in bond yields, which translates into higher interest rates lenders can charge on mortgages and other loans. State Street gained 2.4% and Wells Fargo added 1.2%.
The yield on the 10-year U.S. Treasury note, which influences interest rates on mortgages and other loans, rose to 1.66% from 1.63% late Thursday. It had been as high as 1.75% on Monday.
Most analysts expect inflation to increase as the economy improves.
“We’re seeing some evidence of inflation creeping into the market place, but it’s not problematic,” said Terry Sandven, chief equity strategist at U.S. Bank Wealth Management.
The market’s latest gains are in line with the market’s upward tack this week as investors weigh concerns about the virus tripping up a steady economic recovery against progress in vaccinations and business re-openings.
Investors are showing cautious optimism about the economic recovery, especially in the U.S., where vaccine distribution as been ramping up and President Joe Biden has advanced the deadline for states to make doses available to all adults to April 19.
“There’s optimism on the horizon that overall economic growth will continue as the year unfolds,” Sandven said.
But it’s clear the recovery has a long way to go. The number of Americans who filed for unemployment benefits last week rose again last week, as many businesses remain closed or partially shut down due to the pandemic.
Shares fell Friday in most Asian markets after China reported a stronger than expected rise in prices that could prompt authorities to act to cool inflation.
Japan’s benchmark Nikkei 225 index rebounded after falling the day before. Shares declined in Hong Kong, Shanghai, Sydney and Seoul.
On Thursday, stocks closed moderately higher on Wall Street, lifted by gains in large technology companies that benefit from lower bond yields. But an increase in jobless claims dented some of the buying enthusiasm.
China reported that consumer prices rose in March due largely to a jump in fuel prices, while producer prices climbed at the fastest pace in more than four years.
The consumer price index rose 0.4% in March compared with minus 0.2% in February, as fuel prices jumped nearly 12% from a year earlier. Prices paid by manufacturers rose 4.4% from a year earlier.
Inflation reflects rising demand as China’s economy leads the world recovery from the pandemic. Worries that stronger growth might spur inflation that regulators in many major economies would then move to cool, partly by raising interest rates, have been overhanging the markets for the past several months.
China’s central bank already has ordered lenders to slow the pace of credit growth to counter rising risks.
Added to that, a fresh round of U.S. sanctions, this time against seven Chinese supercomputer makers, has revived concern over trade friction between the two largest economies, said Jeffrey Halley of Oanda.