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April 8, 2021, 4:21 p.m. EDT

Tech shares push S&P 500 to another record after Powell asserts dovish tone

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By Mark DeCambre and Christine Idzelis

The S&P 500 index carved out its 19th record close in 2021 on Thursday, with technology shares leading stock-market gains, as investors digested comments on the global economy from Federal Reserve Chairman Jerome Powell.

Earlier a weekly report on those seeking unemployment benefits in the U.S. showed an unexpected rise, perhaps reinforcing the Fed’s concern about the labor market’s recovery from COVID and the need to keep monetary policy easy.

How are stock benchmarks faring?

  • The Dow Jones Industrial Average /zigman2/quotes/210598065/realtime DJIA +0.66% added 57.31 points, or 0.2%, to finish at 33,503.57.

  • The S&P 500 /zigman2/quotes/210599714/realtime SPX +0.74% rose 17.22 points to reach about 4,097.17, a gain of 0.4%, hitting a new record close, and earlier establishing an intraday record at 4,098.19.

  • The Nasdaq Composite Index /zigman2/quotes/210598365/realtime COMP +0.88% advanced about 140.47 points, or 1%, at 13,829.31.

On Wednesday , the S&P 500 added 6.01 points, or 0.2%, enough to finish at a record 4,079.95, its 18th of the year. The Dow rose 16.02 points, or 0.1%, to close at 33,446.26, its second-highest finish ever, the Nasdaq Composite shed 9.54 points, or 0.1%, ending at 13,688.84, while booking a second day in a row of losses. The small-cap oriented Russell 2000 index /zigman2/quotes/210598147/delayed RUT +1.35% slumped 1.6% to close at 2,223.05.

What’s driving the market?

Stock investors received a boost this month as the surge in U.S. Treasury yields that had rattled markets earlier this year showed signs of losing momentum.

“The biggest thing in April that’s driving markets to new record highs is the fact that 10-year Treasury yields have seemed to plateau,” Michael Arone, chief investment strategist for the U.S SPDR business of State Street Global Advisors, told MarketWatch in a phone interview Thursday. The rise in yields in March had “unnerved investors,” particularly in growth stocks, he explained.

But now, in early April, 10-year Treasury yields have stopped climbing higher, despite signs of a strengthening economy, Arone said. “That’s given investors a bit of relief,” he added and helped to boost technology stocks again. The 10-year Treasury note yield  TMUBMUSD10Y slipped 2.1 basis points to 1.632% Thursday, its lowest since March 25.

Fed Chairman Powell repeated his expectation that a rise in inflation this year would be temporary at  a webinar on the global economic outlook hosted by the International Monetary Fund on Thursday. His comments come a day after minutes from the Fed’s March policy meeting were released showing concerns about the recovery in the job market and the need to keep monetary policy easy until there is more progress towards the Fed’s unemployment goal.

So weak labor-market data reported Thursday failed to undermine the market’s bullish bias with weekly jobless benefit claims showing a rise of 16,000 to 744,000, above expectations for 694,000 from economists surveyed by Dow Jones. Claims were raised to 728,000 in the prior week from the prior estimate of 719,000.

“So while states balance the vaccine rollout with stop and start reopening plans, the labor market continues to feel the heat. But the disappointing read actually puts some firepower behind the Fed’s accommodative stance,” wrote Mike Loewengart, managing director investment strategy at E-Trade Financial.

Continuing claims dropped 16,000 to 3.73 million, marking the lowest level for that measure of employment since March 21, 2020.

“We expect the market to keep moving slowly higher on good economic news, but since most of that news is already priced in, a big move higher (or a big move lower) will only happen if there is a significant bump to the upside (or unexpected drop to the downside) in a major piece of economic news, such as the quarterly GDP number that will be released at the end of April,” wrote Chris Zaccarelli, Chief Investment Officer for Independent Advisor Alliance in a note after the jobless claims data.

US : Dow Jones Global
+229.23 +0.66%
Volume: 311.63M
May 7, 2021 5:15p
+30.98 +0.74%
Volume: 2.05B
May 7, 2021 5:15p
US : Nasdaq
+119.39 +0.88%
Volume: 3.97M
May 7, 2021 5:16p
US : US Composite
+30.21 +1.35%
Volume: 0.00
May 7, 2021 7:01p
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