U.S. stocks climbed Thursday with major averages notching new records as investors flocked into their growth tech darlings again amid easing fears of inflation and rates.
The S&P 500 climbed 1.3% to reach an all-time high, its first record since Feb. 16. The Dow Jones Industrial Average added 350 points to hit another intraday record. The Nasdaq Composite jumped 2.5% amid a rotation back into tech shares. Tesla was up 4%. Apple, Facebook and Netflix all jumped at least 2%, while Amazon, Alphabet and Microsoft shares were also higher.
On the data front, investors cheered a slightly better-than-expected reading on weekly jobless claims. The Labor Department reported that first-time filings for unemployment insurance in the week ended March 6 totaled a seasonally adjusted 712,000, below the Dow Jones estimate of 725,000.
“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. “Combined with stimulus relief in sight and a muted CPI read yesterday plus increased vaccinations and decreased business restrictions, there’s a pretty optimistic picture being painted.”
The 10-year Treasury yield, which had retreated from its recent high of 1.6%, was little changed at 1.52% on Thursday.
Tech and growth stocks are rebounding from a swift correction triggered by rising interest rates. Higher rates make profits in far-off years seem less attractive to investors and can knock down stocks with relatively high valuations.
The Nasdaq Composite dipped into correction territory on Monday, falling more than 10% from its recent high. Now the tech-heavy benchmark is about 5% off its record high.
President Joe Biden is expected to sign the $1.9 trillion coronavirus relief package Thursday afternoon. The plan will send direct payments of up to $1,400 to most Americans, and will also put nearly $20 billion into Covid-19 vaccinations and $350 billion into state, local and tribal relief.
“The stimulus is beating the virus at least as far as the market is concerned,” said Scott Ladner, chief investment officer at Horizon Investments. “And real rates being near negative is just historically a very strong tailwind for asset prices. That can get ignored on a day-to-day basis especially when people become concerned that inflation is going to rear its head, but at the end of the day, inflation is just coming back to normal.”
The economic reopening, coupled with additional fiscal stimulus, accelerated the rotation into more cyclical sectors, such as energy. The S&P 500 energy sector has been the biggest winner this year, up 40% so far.
