Dow Jumps To New Record Closing High But Nasdaq Edges Slightly Lower

After ending Tuesday’s trading modestly higher amid a rally by tech stocks, the Dow showed a substantial move to the upside during trading on Wednesday. The blue chip index jumped to a new record closing high, although the tech-heavy Nasdaq edged slightly lower after yesterday’s spike.

The Dow surged up 464.28 points or 1.5 percent to 32,297.02 and the S&P 500 climbed 23.37 points or 0.6 percent to 3,898.81. Meanwhile, the Nasdaq slipped 4.99 points or less than a tenth of a percent to 13,068.83.

Stocks moved mostly higher early in the session following the release of a Labor Department report showing tame consumer price inflation in the month of February.

Concerns about inflation have contributed to the recent spike in bond yields, which has resulted in considerable volatility on Wall Street in recent sessions.

Bond yields pulled back near the unchanged line following the release of the inflation data after moving modestly higher earlier this morning.

The Labor Department said its consumer price index climbed by 0.4 percent in February after rising by 0.3 percent in January. The increase in prices matched expectations.

Gasoline prices led the way higher once again, surging up by 6.4 percent in February following a 7.4 percent spike in January.

Excluding food and energy prices, core consumer prices inched up by 0.1 percent in February after coming in unchanged for two straight months. Economists had expected core prices to rise by 0.2 percent.

On an annual basis, consumer price growth accelerated to 1.7 percent in February from 1.4 percent in January but core price growth slowed to 1.3 percent from 1.4 percent.

Early buying interest may also have been generated in reaction to reports indicating the U.S. plans to buy 100 million additional doses of Johnson & Johnson’s (JNJ) Covid-19 vaccine.

The Dow saw further upside as the day progressed, while the Nasdaq gave back ground as traders once again looked to cash in on the strength in the tech sector.

Sector News

Energy stocks saw considerable strength on the day, benefiting from a rebound by the price of crude oil. Crude for April delivery rose $0.43 to $64.44 a barrel after moving sharply lower over the two previous sessions.

Reflecting the strength in the energy sector, the Philadelphia Oil Service Index soared by 5.6 percent, the NYSE Arca Natural Gas Index spiked by 3.6 percent and the NYSE Arca Oil Index surged up by 2.6 percent.

Substantial strength was also visible among housing stocks, as reflected by the 2.8 percent jump by the Philadelphia Housing Sector Index

Toll Brothers (TOL) helped lead the sector higher after the luxury homebuilder announced a 54 percent increase in its quarterly dividend to $0.17 per share.

Banking, chemical, and telecom stocks also saw significant strength on the day, while semiconductor stocks came under pressure after helping lead the rally by stocks on Tuesday.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region turned in another mixed performance during trading on Wednesday. Japan’s Nikkei 225 Index closed just above the unchanged line, while China’s Shanghai Composite Index edged down by 0.1 percent.

Meanwhile, European stocks moved mostly higher on the day. The French CAC 40 Index jumped by 1.1 percent and the German DAX Index advanced by 0.7 percent, although the U.K.’s FTSE 100 Index bucked the uptrend and closed marginally lower.

In the bond market, treasuries moved higher over the course of the session after seeing initial weakness. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, fell by 2.6 basis points to 1.520 percent.

Looking Ahead

Trading on Thursday may be impacted by reaction to the Labor Department’s report on first-time claims for U.S. unemployment benefits in the week ended March 6th.

The Treasury Department is also scheduled to announce the results of this month’s auction of $24 billion worth of thirty-year bonds.