NEW YORK, March 12 — The S&P 500 and the Dow closed at all-time highs yesterday as worries about rising inflation subsided, while a bigger-than-expected fall in weekly jobless claims and the signing of a massive stimulus bill reinforced expectations of a strong economic recovery.
Mega-cap stocks Microsoft Corp, Apple Inc, Facebook Inc and Amazon.com Inc led the rally, recouping losses from a recent pullback and helping the benchmark S&P 500 surpass its February 12 close of 3,934.83.
The blue-chip Dow scaled a new record for the fourth straight session, while the tech-heavy Nasdaq is now less than 5 per cent below its February 12 peak after slumping over 10 per cent to confirm a correction at the beginning of this week.
President Joe Biden signed his US$1.9 trillion (RM7.8 trillion) stimulus bill into law yesterday, commemorating the one-year anniversary of a US lockdown over the coronavirus pandemic with a measure designed to bring relief to Americans and boost the economy.
The relief package, on top of the ongoing recovery fuelled by the coronavirus vaccination rollout and fading fears of inflation, were driving the market, said Jason Pride, chief investment officer for private wealth at Glenmede in Philadelphia.
While tech led yesterday’s advance, there was still a rotation into value stocks, which have outperformed high-priced growth stocks since November.
“There is a recovery in the valuations of those companies more impacted by the epidemic and a giveback of the valuations of those companies that were more insulated and maybe even perhaps benefited from the pandemic,” Pride said.
“Markets are trading at valuation extremes at this point,” he said.
The Dow Jones Industrial Average rose 188.57 points, or 0.58 per cent, to 32,485.59, the S&P 500 gained 40.53 points, or 1.04 per cent, to 3,939.34 and the Nasdaq Composite added 329.84 points, or 2.52 per cent, to 13,398.67.
Volume on US exchanges was 13.02 billion shares, compared with the 14.871 billion average for the full session over the last 20 trading days.
Fewer than expected Americans filed new claims for unemployment benefits last week as vaccinations allow more segments of the economy to reopen.
“The drop in jobless claims is another win for the week, and a solid sign that we’re making some strides toward pre-pandemic life,” said Mike Loewengart, managing director of investment strategy at E*Trade Financial.
The latest US Treasury auction — US$24 billion of 30-year bonds — did not reignite inflation concerns unlike a weak seven-year note auction last month that helped send yields higher, spooking markets.
“That story line has dissipated a little bit,” said Pride, pointing to tame consumer prices data for February.
The S&P 500’s industrials and communication services sectors reached all-time highs.
Wall Street’s fear gauge hit a two-week low at 21.45 points before ending at 21.91, a sign of easing fears over inflation.
Coupang, backed by SoftBank Group Corp, ended the day valued at about US$85 billion yesterday after South Korea’s largest e-commerce company and a group of investors raised around US$4.6 billion in the biggest US initial public offering this year.
SoftBank racked up a roughly US$33 billion paper gain after Coupang’s stock soared 81 per cent to open at US$63.50, and later pared gains to close up 40.7 per cent at US$49.25.
Bumble Inc jumped 10.8 per cent after it reported a bigger-than-estimated rise in fourth-quarter revenue and said it expected pent-up demand from people who had been avoiding dating in person due to the pandemic.
A so-called “meme” stock AMC Entertainment Holdings Inc gained 4.36 per cent as the cinema chain said the rollout of Covid-19 vaccines and the release of major movies would boost sales this year.
Oracle Corp slumped 6.5 per cent as the business software maker’s cloud division reported quarterly revenue that missed analysts’ estimates on increased competition from Amazon.com and Microsoft.
Advancing issues outnumbered declining ones on the NYSE by a 3.10-to-1 ratio; on Nasdaq, a 3.87-to-1 ratio favoured advancers. The S&P 500 posted 74 new 52-week highs and no new lows; the Nasdaq Composite recorded 327 new highs and eight new lows. — Reuters
