Technology stocks lead S&P 500, Dow to record highs

This post was originally published on this site

(Reuters) – The S&P 500 and the Dow industrials extended all-time highs on Thursday as falling bond yields and strong March U.S. retail sales data sparked buying of richly valued technology stocks.

The S&P information technology and communication services indexes rose 1.7% and 1.3% respectively, led by components Apple Inc, Microsoft Corp and Facebook Inc. The trio, which had underperformed last month, climbed between 1.3% and 1.9%.

The Federal Reserve’s assurances that it would maintain an accommodative monetary policy despite higher inflation, as well as more fiscal stimulus, have revived U.S. stock markets and put the Nasdaq Composite Index about 1.2% below its all-time high.

The S&P 500 has hit record highs in five of the last six sessions, and the Dow surpassed its peak for the third session in five.

The benchmark 10-year Treasury yield slipped below 1.6% for the first time since March 25. [US/]

Graphic: 6-month chart of S&P tech sector and 10-yr U.S. Treasury https://fingfx.thomsonreuters.com/gfx/mkt/jznpnaxlkvl/Pasted%20image%201618508231031.png

Top U.S. banks kicked off the first-quarter reporting season on Wednesday, with Goldman Sachs Group Inc, JPMorgan Chase & Co and Wells Fargo & Co posting bumper results.

Bank of America and Citigroup Inc also offered optimistic views on an economic recovery in their earnings reports on Thursday, but shares of the second-biggest U.S. lender fell 3.5% after its profit squeaked by Wall Street estimates. Citi’s shares fell 1%.

“Uncharacteristically, expectations for earnings have improved for the quarter and what tends to move markets is when the numbers are far better than expected,” said Randy Frederick, vice president of trading and derivatives for Charles Schwab.

“While individual names may sell off, the overall sector is fine.”

By 2:27 p.m. ET, the Dow Jones Industrial Average rose 288.19 points, or 0.85%, to 34,019.08; the S&P 500 gained 43.69 points, or 1.06%, at 4,168.35; and the Nasdaq Composite added 176.34 points, or 1.27%, at 14,034.18.

BlackRock Inc, the world’s largest asset manager, gained 1.9% after reporting a 16% jump in first-quarter profit, while PepsiCo Inc dipped 0.1% despite it forecasting a pickup in organic revenue growth in the second quarter.

Further bolstering sentiment, data showed retail sales jumped sharply in March as Americans received additional pandemic relief checks from the government, while jobless claims fell more than expected to 576,000 last week to a one-year low.

“For U.S. equities, it’s the best of both worlds, as we have the 10-year down but we have good economic data. That’s exactly what you’d want to see,” said Tim Murray, a T. Rowe Price Associates capital markets strategist.

Cryptocurrency exchange Coinbase Global Inc slipped 0.5%, a day after going public in a high-profile debut on the Nasdaq that briefly valued it at more than $100 billion.

AppLovin Corp fell 17.6% on its first day of trading after its initial public offering valued the mobile app and gaming company at $28.6 billion.

Advancing issues outnumbered declining ones on the NYSE by a 1.72-to-1 ratio; on Nasdaq, a 1.03-to-1 ratio favored decliners.

The S&P 500 posted 81 new 52-week highs and no new lows; the Nasdaq Composite recorded 87 new highs and 46 new lows.

(Reporting by Shivani Kumaresan and Shreyashi Sanyal in Bengaluru and David French in New York; Editing by Saumyadeb Chakrabarty, Arun Koyyur and Richard Chang)