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April 1, 2021, 4:27 p.m. EDT

S&P 500 hits 4,000 milestone as US. manufacturing index soars to 38-year high

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By William Watts and Sunny Oh

The S&P 500 index finished above 4,000 for the first time on Thursday, led by technology stocks, as investors were buoyed by data showing the U.S. manufacturing sector expanding at its fastest pace in 38 years ahead of Friday’s U.S. employment report.

U.S. stock exchanges will be closed in observance of Good Friday and those in Europe will also be closed for Easter Monday.

What are major indexes doing?

  • The Dow Jones Industrial Average /zigman2/quotes/210598065/realtime DJIA +0.66% rose 171.66 points, or 0.5%, to 33,153.21.

  • The S&P 500 /zigman2/quotes/210599714/realtime SPX +0.74% gained 46.98 points or 1.2%, to 4,019.87, a new record.

  • The Nasdaq Composite Index /zigman2/quotes/210598365/realtime COMP +0.88% added 233.23 points, or 1.8%, to 13,480.11.

On Wednesday , equity benchmarks finished mostly higher, with tech shares in the lead. The Dow shed 85.41 points, or 0.3%, while the S&P 500 advanced 0.4%, closing just shy of its record close from Friday. The tech-heavy Nasdaq jumped 1.5%.

Major indexes posted quarterly gains, with the Dow up 7.8%, the S&P 500 up 5.8% and the Nasdaq up 2.8%. The small-cap Russell 2000 /zigman2/quotes/210598147/delayed RUT +1.35% jumped more than 12%.

Read: The Dow just beat the Nasdaq by the widest margin in a month since 2002. Here’s how stocks tend to perform afterward

What’s driving the market?

Investors on Thursday digested President Joe Biden’s $2.3 trillion infrastructure plan announced late Wednesday as well as data on the U.S. manufacturing sector and weekly jobless benefit claims.

While tech shares rose Thursday, more cyclically sensitive stocks outpaced tech and other growth stocks in the first quarter as investors reacted to aggressive fiscal stimulus efforts that have fueled expectations for a near-term boom in economic growth and the potential for a sharp rise in inflationary pressures.

Biden’s infrastructure proposal is offset by tax hikes, including a rise in the corporate tax rate to 28% from 21%, an increase in the global minimum tax on U.S. multinational companies, the establishment of what’s called a 15% minimum tax on book income, the elimination of tax preferences for fossil fuels and an increase in enforcement on corporations.

Although the infrastructure plan “is good news for the economy and it seems to be a supportive development for equities, it would be interesting to wait and see whether this will revive fears of an overheating economy,” said Charalambos Pissouros, senior market analyst at JFD Group, in a note.

Investors will be also keeping a close eye on developments on the tax front, analysts said. “The larger impact to markets will be whether or not the corporate tax rate is raised to 28% — or somewhere in between there and the current 21% level — and whether or not a global minimum tax on corporations can be established,” said Chris Zaccarelli, chief investment officer for the Independent Advisor Alliance, in emailed comments.

“It’s likely that the stock market can withstand a hike in the corporate tax rate to 25%, but unclear how much room there is above that if stocks are going to keep moving higher between now and year-end,” said Zaccarelli.

In U.S. economic data on Thursday, Institute for Supply Management’s manufacturing activity showed rose to 64.7% from 60.8% in the prior month, marking the highest reading since 1983. The report followed IHS Markit’s U.S. Manufacturing Purchasing Managers’ Index, which came in at 59.1 in March, up from 58.6 in February, marking the second-highest level on record. For both gauges, a reading above 50 indicates growth in activity.

/zigman2/quotes/210598065/realtime
US : Dow Jones Global
34,777.76
+229.23 +0.66%
Volume: 311.63M
May 7, 2021 5:15p
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/zigman2/quotes/210599714/realtime
US : S&P US
4,232.60
+30.98 +0.74%
Volume: 2.05B
May 7, 2021 5:15p
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/zigman2/quotes/210598365/realtime
US : Nasdaq
13,752.24
+119.39 +0.88%
Volume: 3.97M
May 7, 2021 5:16p
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/zigman2/quotes/210598147/delayed
US : US Composite
2,271.63
+30.21 +1.35%
Volume: 0.00
May 7, 2021 7:01p
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