NEW YORK, March 31 ― US stocks rose yesterday as technology-related shares extended their recent strong run, while regional US bank shares fell as the Biden administration proposed stronger measures to help reduce risk.
The S&P 500 technology index was up 1.1 per cent and gave the S&P 500 its biggest boost, while the Philadelphia semiconductor index hit its highest level in nearly a year. Wednesday's strong gains grew on optimism that a downturn in chip sales has ended.
US regional bank shares fell as the Biden administration called for stricter rules that would strengthen mid-sized banks without having to go to Congress.
The KBW regional bank index ended down 2 per cent, and the S&P 500 financial index fell 0.3 per cent, the only S&P 500 sector in negative territory on the day.
“Tech is probably the furthest sector removed from financials,” so there has been a rotation away from financials, said Jack Ablin, chief investment officer at Cresset Capital in Chicago.
The banking turmoil, which started earlier this month with the collapse of two regional US lenders, had sparked concerns about a broader financial crisis.
With one day to go in the first quarter, the technology sector was up about 20 per cent for the period, leading sector gains along with communication services, which is up about 18 per cent. Nasdaq is on track for its biggest percentage quarterly gain since the end of 2020.
Investors also awaited the February reading of personal consumption expenditures (PCE) price index due Friday after January figures showed a sharp acceleration in consumer spending.
Three Federal Reserve officials kept the door open yesterday to more rate rises aimed at lowering inflation, with two noting banking sector problems could generate enough headwinds on the economy.
The Dow Jones Industrial Average rose 141.43 points, or 0.43 per cent, to 32,859.03, the S&P 500 gained 23.02 points, or 0.57 per cent, to 4,050.83 and the Nasdaq Composite added 87.24 points, or 0.73 per cent, to 12,013.47.
Fed funds futures traders are now pricing in a 55 per cent chance of a 25-basis-point rate increase at the Fed's May 2-3 meeting.
Data earlier yesterday showed jobless claims last week rose more than expected from the week before, indicating a cooling labour market.
Separately, fourth-quarter GDP growth was slightly lower at 2.6 per cent compared with earlier estimates of 2.7 per cent, both supporting the case for a softer Fed policy.
In another report, the Commerce Department confirmed the economy grew at a solid clip in the fourth quarter, but much of the increase in output came from inventory accumulation.
US-listed shares of Alibaba Group Holding climbed 3.5 per cent on areport that its logistics arm had started preparations with banks for its Hong Kong initial public offering, while those of JD.Com jumped 7.8 per cent on plans to spin off its real estate infrastructure arm.
Faraday Future Intelligent Electric Inc rose after the company said it had started production of its first luxury electric car after a months-long delay, but the stock ended the day down slightly.
Advancing issues outnumbered decliners on the NYSE by a 2.70-to-1 ratio; on Nasdaq, a 1.18-to-1 ratio favoured advancers.
The S&P 500 posted eight new 52-week highs and no new lows; the Nasdaq Composite recorded 63 new highs and 151 new lows.
Volume on US exchanges was 10.36 billion shares, compared with the 12.68 billion average for the full session over the last 20 trading days. ― Reuters
