By Joe Wallace and Paul Vigna
The S&P 500 closed above 4000 for the first time in its
history, setting a record to begin the second quarter.
The broad stock gauge jumped 46.98 points, or 1.2%, to 4019.87,
after closing out a fourth consecutive quarterly advance on
Wednesday. It took just 434 trading days for the index to set its
latest 1,000-point milestone, far fewer than the 1,227 trading it
needed to climb to 3000 from 2000.
The Nasdaq Composite rose 233.23 points, or 1.8%, to 13480.11.
The Dow Jones Industrial Average added 171.66 points, or 0.5%, to
33153.21.
"There's always some excitement starting a new quarter," said
Lindsey Bell, the chief investment strategist at Ally Invest, and
having the S&P cross a milestone is another confidence booster.
She cautioned, however, that the market can get stuck on these
numbers, too. "Lots of times the market has to test that level a
few times before it can go higher."
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 amid widespread vaccinations, fresh
spending programs from the Biden administration and earnings
expectations. Still, they point to risks stemming from rising bond
yields, new lockdowns in Europe and signs of excess in corners of
the market.
Over the past year, stocks have risen sharply in expectation of
an economic rebound, said Shawn Snyder, a strategist at Citi U.S.
Wealth Management. Now that it appears to be here, investors have
"Covid jitters," he said, looking warily at inflation expectations
and, ultimately, a reversal of Federal Reserve policy.
"We're exiting this Goldilocks situation [for stocks] and
wondering if the porridge is too hot," he said.
Some are questioning whether this year's rotation 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.
That thinking was evident Thursday.
"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 said he thinks information-technology
stocks such as Microsoft and Salesforce.com would provide a cushion
if cyclical stocks lose momentum.
Despite the sector rotation in the stock market this year, tech
stocks were the biggest drivers of the S&P 500's latest
1,000-point milestone. Five stocks -- Apple, Microsoft, Amazon.com,
Facebook and Alphabet -- contributed 44% of the gains, according to
S&P Dow Jones Indices.
On the economic front, 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.
Although U.S. investors will also been eager to see the March
payrolls report Friday morning, they won't be able to trade on the
data until Monday, as the equities markets will be closed for Good
Friday.
The Institute for Supply Management's March survey of purchasing
managers at U.S. factories was better than expected, showing
another solid month for new orders, output and employment. The
March PMI came in at 64.7, higher than the projected 61.7.
That is another welcome sign for the economy. On Wednesday,
President Biden unveiled a $2.3 trillion infrastructure plan
centered on fixing roads and bridges, expanding broadband internet
access and boosting funding for research and development.
Semiconductor producers and others stand to benefit from President
Biden's infrastructure package, Mr. Andersen said.
In corporate news, shares of Micron Technology rose $4.20, or
4.8%, to $92.41 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 -- gained $4.62, or
6.9%, to $71.37
The yield on 10-year Treasury notes slipped to 1.680% from
1.749% Wednesday, its largest one-day drop since November. 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.
Thursday's moves bolstered investors who 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 rose after the Organization of the Petroleum
Exporting Countries and a group of other big producers led by
Russia agreed Thursday to add about 350,000 barrels a day in
production, with more loosening later this year.
U.S. crude rose 3.9% to $61.45. Analysts expected the cartel to
keep output cuts in place to bolster the oil market after a recent
slide in prices.
In overseas markets, the Stoxx Europe 600 rose 0.6%, led by tech
and real-estate stocks. China's Shanghai Composite Index and
Japan's Nikkei 225 both rose 0.7%.
Write to Joe Wallace at Joe.Wallace@wsj.com and Paul Vigna at
paul.vigna@wsj.com
(END) Dow Jones Newswires
April 01, 2021 16:58 ET (20:58 GMT)
Copyright (c) 2021 Dow Jones & Company, Inc.
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