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June 29, 2021, 4:31 p.m. EDT

S&P 500, Nasdaq end at records with consumer confidence back to pre-pandemic level

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By Christine Idzelis and William Watts

The S&P 500 and Nasdaq Composite finished Tuesday in record territory, as shares of some big banks got a lift after announcing dividend hikes, defying concerns about high valuations and the spread of the delta variant of the coronavirus globally.

How are stock benchmarks performing?

  • The Dow Jones Industrial Average /zigman2/quotes/210598065/realtime DJIA -2.53% rose 9.02 points, or less than 0.1%, to 34,292.29.

  • The S&P 500 /zigman2/quotes/210599714/realtime SPX -2.27% added 1.19 points, or less than 0.1%, to a record close of 4,291.80.

  • The Nasdaq Composite /zigman2/quotes/210598365/realtime COMP -2.23% advanced 27.83 points, or 0.2%, to a record close of 14,528.33.

On Monday , the Dow fell 150.57 points, or 0.4%, closing at 34,283.27, while the S&P 500 added 9.91 points, or 0.2%, to end at a then record 4,290.61, and the Nasdaq Composite Index climbed 140.12 points, or 1%, finishing at a then record 14,500.51.

What drove the market?

Stocks edged higher, with analysts saying investors remain buoyed by optimism about the economic recovery from the COVID pandemic as consumer confidence and house prices surge.

The U.S. Conference Board on Tuesday said its consumer confidence index leapt to 127.3 this month from 120 in May, hitting its highest level since just before the pandemic took hold in March 2020.

That’s “a remarkable shift, given that payrolls are still some 10 million lower than we would have expected if the pandemic hadn’t happened,” said Ian Shepherdson, chief economist at Pantheon Macroeconomics, in a note. “But people are responding to record highs for asset prices and, presumably, to the very low recent COVID case numbers.”

Consumer confidence is also supported by “the tremendous amount of job openings ,” said Jeff Mills, chief investment officer of Bryn Mawr Trust, in a phone interview Tuesday. The loss of unemployment benefits may be replaced with “actual wages,” he said.

The march to new stock market highs, however, is creating its own jitters, as investors ponder what’s left to fuel further advances, analysts said.

A recent Citigroup survey indicated that investors are more fearful of a pullback in equities than they are hopeful about a continuing rally though. The Citigroup survey of its clients indicated that investors are most worried about Federal Reserve policy and  inflation .

“Under the surface, we’re starting to see a little bit of weakness,” said Mills. “The market’s becoming a little bit more top-heavy.”

Mills explained that fewer stocks are trading above their 50-day moving average compared to April, meaning the market is being driven higher by a smaller number of companies. “Even though the stock market continues to push higher,” he said that “it’s reasonable to expect some sort of turbulence over the next couple months just given the fact that the leadership is a little bit less broad.”

Meanwhile, Bryn Mawr Trust is tilted toward value stocks as well as mid-cap and small-cap equities, a cyclical positioning that Mills expect will pay off as the economy keeps strengthening. He added that developed-market indexes outside the U.S., which are “more cyclical by design” with more exposure to areas such as financials and industrials, should have “an outsized benefit” from the global recovery from the pandemic.

While “plenty of good news” is priced into markets, and the potential remains for near-term volatility, investors shouldn’t be fearful just because markets have hit a string of new highs, said Mark Haefele, chief investment officer at UBS Global Wealth Management, in a Tuesday note.

Data going back to the 1960s shows that stocks tend to do better than average after hitting all-time highs, while a broadening global economic recovery and prospects for continued earnings growth provide a positive backdrop, he said. And despite a shift in tone by the Federal Reserve at its policy meeting earlier this month, monetary policy remains very supportive, Haefele said.

US : Dow Jones Global
-905.04 -2.53%
Volume: 325.39M
Nov. 26, 2021 2:12p
-106.84 -2.27%
Volume: 2.10B
Nov. 26, 2021 2:12p
US : Nasdaq
-353.57 -2.23%
Volume: 3.05M
Nov. 26, 2021 4:14p
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