S&P 500 gets boost to finish at record

Apple, Tesla climb as Wall Street sees the market rise almost 10%

Wall Street traders sent stocks higher in the final stretch of a quarter that saw the market surge almost 10%, with many institutional investors potentially rebalancing their portfolios.

In another volatile session, the S&P 500 closed at a record after almost erasing gains earlier Wednesday. Apple Inc. and Tesla Inc. — this year's laggards in the megacap space — climbed, while Nvidia Corp. fell. The Dow Jones Industrial Average added over 1%. The Nasdaq 100 underperformed. Treasuries rose, with the market set to close early before the holiday.

Every quarter-end, institutional investors check their market exposures to make sure they meet strict allocation limits between equities and bonds, as well as between domestic and international shares. With stocks set to cap another strong quarter, pension funds are likely to sell an estimated $32 billion in equities to rebalance their positions, according to Goldman Sachs Group Inc.

“At the end of almost every quarter, we hear chatter around Wall Street that there is going to have to be some big rebalancing play,” said Matt Maley at Miller Tabak + Co. “Maybe the quarterly rebalancing that everybody talks about each quarter, but rarely has much impact, just might create some more interesting moves before the week (and quarter) are over.”

The S&P 500 approached 5,250. Merck & Co. rallied as a new drug for a rare form of high blood pressure got U.S. approval. Former President Donald Trump's Trump Media & Technology Group Corp. powered higher after a stellar Nasdaq debut. Treasury 10-year yields declined four basis points to 4.19%.

Traders also awaited Federal Reserve Governor Christopher Waller's remarks at an event after the close.

To Thierry Wizman at Macquarie, Waller may offer a “rebuke of Jay Powell's dovishness.”

“While not dismissing the prospect of a June cut, Waller may point to sturdy US aggregate demand and `sticky' inflation in the January and February data to justify fewer rate cuts than the median `dots' imply,” Wizman noted.

Gentle rate cuts could create a mildly supportive environment for risk assets — which could also be helped by a high level of cash on the sidelines, according to Kristina Hooper at Invesco.