Optimism About Economy Reopening Leads To Rally On Wall Street

Stocks moved sharply higher during trading on Friday, extending the upward move seen over the course of the previous session. With the continued advance, the Dow and the S&P 500 ended the session at new record closing highs.

The major averages accelerated to the upside going into the close. The Dow surged up 453.40 points or 1.4 percent to 33,072.88, the Nasdaq jumped 161.05 points or 1.2 percent to 13,138.73 and the S&P 500 spiked 65.02 points or 1.7 percent to 3,974.54.

For the week, the major averages turned in a mixed performance. While the Nasdaq fell by 0.6 percent, the Dow and the S&P 500 advanced by 1.4 percent and 1.6 percent, respectively.

The strength on Wall Street partly reflected optimism about the economy reopening after President Joe Biden doubled his goal for the administration of coronavirus vaccines in his first 100 days in office.

On Thursday Biden announced a new goal of administering 200 million coronavirus vaccinations within his first 100 days after reaching his goal of 100 million shots before his 60th day in office.

“I know it’s ambitious, twice our original goal. But no other country in the world has even come close, not even close to what we are doing. I believe we can do it,” Biden told reporters at his first official press conference as president.

According to the Centers for Disease Control and Prevention, 137 million Covid vaccines have been administered, with nearly 15 percent of the population fully vaccinated.

Banking stocks helped lead the way higher after the Federal Reserve announced restrictions on bank holding company dividends and share repurchases will end for most firms after June 30th.

The Fed said firms with capital levels above those required by the current round of stress tests will no longer be subject to the additional restrictions.

“The banking system continues to be a source of strength and returning to our normal framework after this year’s stress test will preserve that strength,” said Fed Vice Chair for Supervision Randal K. Quarles.

In U.S. economic news, the Commerce Department released a report showing personal income pulled back sharply in the month of February.

The Commerce Department said personal income plunged by 7.1 percent in February after skyrocketing by an upwardly revised 10.1 percent in January.

Economists had expected personal income to plummet by 7.3 percent compared to the 10.0 percent spike originally reported for the previous month.

The sharp pullback in personal income primarily reflected a decrease in government social benefits following the distribution of $600 stimulus checks in January.

The report also showed personal spending slumped by 1.0 percent in February after soaring by an upwardly revised 3.4 percent in January.

Economists had expected personal spending to decrease by 0.7 percent compared to the 2.4 percent jump originally reported for the previous month.

Meanwhile, a reading on inflation said to be preferred by the Federal Reserve showed the annual rate of core consumer price growth slowed to 1.4 percent in February from 1.5 percent in January.

A separate report from the University of Michigan showed U.S. consumer sentiment improved by even more than previously estimated in the month of March.

The University of Michigan said its consumer sentiment index for March was upwardly revised to 84.9 from the preliminary reading of 83.0. Economists had expected the index to be upwardly revised to 83.6.

The consumer sentiment index is well above the final February reading of 76.8, reaching its highest level since hitting 89.1 in the same month a year ago.

Sector News

Steel stocks moved sharply higher on optimism about the outlook for global demand, with the NYSE Arca Steel Index spiking by 5.7 percent.

Substantial strength was also visible among networking stocks, as reflected by the 4 percent jump by the NYSE Arca Networking Index.

Semiconductor and computer hardware stocks also saw considerable strength on the day, contributing to the advance by the tech-heavy Nasdaq.

Housing, tobacco, oil and chemical stocks also showed significant moves to the upside, reflecting broad based buying interest.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly higher during trading on Friday. Japan’s Nikkei 225 Index and China’s Shanghai Composite Index both surged up by 1.6 percent.

The major European markets also moved to the upside on the day. While the U.K.’s FTSE 100 Index jumped by 1 percent, the German DAX Index advanced by 0.8 percent and the French CAC 40 Index rose by 0.6 percent.

In the bond market, treasuries gave back ground after trending higher earlier in the week. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, climbed 4.6 basis points at 1.660 percent.

Looking Ahead

Reports on consumer confidence, private sector employment, and manufacturing activity may attract attention next week, although trading activity is likely to be somewhat subdued ahead of the Easter weekend.

The Labor Department’s closely watched monthly jobs report is scheduled to be released next Friday, when the markets will be closed for Good Friday.