By Joy Wiltermuth and Mark DeCambre
U.S. stock indexes closed further in record territory Wednesday, with the Dow Jones Industrial Average extending its gains to a fourth straight day.
The move higher for equities comes as strong second-quarter corporate earnings offset doubts about the pace of economic recovery, even with the coronavirus delta variant limiting consumer and business activity in some countries.
What did major stock index do?
The Dow Jones Industrial Average /zigman2/quotes/210598065/realtime DJIA +1.09% rose 39.24 points, or 0.1%, to end at 35,405.50, supported by gains in financials Goldman Sachs Group Inc . /zigman2/quotes/209237603/composite GS +3.80% , American Express Co. /zigman2/quotes/203805826/composite AXP +2.51% , and JPMorgan Chase & Co /zigman2/quotes/205971034/composite JPM +1.92% .
The S&P 500 index /zigman2/quotes/210599714/realtime SPX +0.75% added 9.96 points, or 0.2%, finishing at a record 4,496.19, after establishing a fresh intraday record at 4,501.71 and boosted by a 1.2% rise in financials /zigman2/quotes/210599854/delayed XX:SP500.40 +1.51% .
The Nasdaq Composite Index /zigman2/quotes/210598365/realtime COMP +0.50% climbed 22.06 points, or 0.2%, closing at a record 15,041.86, after establishing an intraday all-time high at 15,059.43.
What drove markets?
Investors pushed equities higher Wednesday, with the S&P 500 index putting in its 51th all-time high of 2021 and the Nasdaq Composite booking its 30th record close of the year.
“There’s all kinds of cash all over the place, and people are looking for places to put cash to work,” said Mike Mullaney, director of global markets research at Boston Partners, in a phone interview.
Recently, there’s been renewed buying in shares of big U.S. technology giants, or “safety stocks” that helped propel equities higher after the spring 2020 restrictions took hold, he said.
Mullaney attributed the popularity of tech stocks to the climb in COVID infections and hospitalizations due largely to the coronavirus delta variant, but also to “tapering potentially on the horizon,” as investors have grown a bit more defensive.
But for now, ample liquidity provided by the Federal Reserve and by lawmakers in Washington in the form of fiscal support remains in focus.
“For sure, the liquidity from Congress and the Federal Reserve has been unprecedented,” said Joe Quinlan, head of CIO market strategy for Merrill and Bank of America Private Bank. “But it’s done its job.”
Quinlan argues that the private sector remains ready to step forward and drive economic growth when the Fed decides to cut back its support, including by reducing its large-scale asset purchases. “There’s going to be handoff,” he told MarketWatch. “I’m not worried about tapering.”
The deluge of buybacks in the financial sector this year also suggests a feeling of resilience among top banking CEOs, with share repurchase volumes now overtaking the tech sector.
Recent activity in Washington also points to future fiscal support for the economy. House Democrats approved a $3.5 trillion budget resolution late Tuesday and advanced the $1 trillion bipartisan infrastructure bill.
The fiscal influx would come as strong second-quarter results from American corporations already have helped to buoy stock-market optimism. Of the S&P 500 index companies that have reported second-quarter results, through last Friday, nearly 90% of them delivered results above expectations, marking the highest such tally on record, dating back to 1994, according to data compiled by Refinitiv.