Tech Stocks Rally, S&P 500 Reaches New Record Closing High

After ending the previous session little changed, stocks moved mostly higher over the course of the trading day on Thursday. The tech-heavy Nasdaq showed a particularly strong upward move, while the S&P 500 reached a new record closing high.

The major averages all closed in positive territory, although the Nasdaq outperformed its counterparts. While the Nasdaq jumped 140.47 points or 1 percent to 13,829.31, the S&P 500 rose 17.22 points or 0.4 percent to 4,097.17 and the Dow inched up 57.31 points or 0.2 percent to 33,503.57.

The advance by the Nasdaq partly reflected strength among big-name tech stocks, with Tesla (TSLA), Apple (AAPL) and Microsoft (MSFT) posting notable gains.

The strength among tech stocks came following the Federal Reserve’s repeated assurances that monetary policy is likely to remain unchanged for the foreseeable future.

The minutes of the Fed’s March meeting reiterated that the central bank does not intend to change its ultra-loose monetary policy anytime soon.

The Fed stressed any changes to policy will be outcome-based, indicating interest rates will remain unchanged until the goals of maximum employment and inflation moderately above 2 percent for some time are achieved.

The minutes also showed officials are not concerned about the recent increase in Treasury yields, which the Fed attributed to investor optimism about the economic outlook and expectations of higher Treasury debt issuance.

Stocks saw continued strength during Federal Reserve Chair Jerome Powell’s remarks at a virtual International Monetary Fund event.

Powell noted the economic recovery remains “uneven and incomplete” and cautioned that further coronavirus outbreaks could slow the pace of the recovery.

The Fed chief also continued to downplay the risk of inflation, acknowledging that there will be upward pressure on prices but arguing that it will be temporary.

At the same time, Powell stressed that the Fed would be able to react if inflation expectations rise “persistently and materially” above levels the central bank is comfortable with.

In U.S. economic news, the Labor Department released a report showing first-time claims for U.S. unemployment benefits unexpectedly increased in the week ended April 3rd.

The report said initial jobless claims edged up to 744,000, an increase of 16,000 from the previous week’s revised level of 728,000.

Jobless claims rose for the second straight week after falling to a one-year low of 658,000 in the week ended March 20th.

The continued increase surprised economists, who had expected jobless claims to drop to 680,000 from the 719,000 originally reported for the previous month.

Sector News

Gold stocks showed a significant move to the upside on the day, driving the NYSE Arca Gold Bugs Index up by 2.4 percent to its best closing level in almost two months.

The rally by gold stocks came amid a notable increase by the price of the precious metal, with gold for June delivery climbing $16.60 to $1,758.20 an ounce.

Considerable strength was also visible among software stocks, as reflected by the 1.7 percent gain posted by the Dow Jones U.S. Software Index. The index reached its best closing level in well over a month.

Networking stocks also turned in a strong performance on the day, resulting in a 1.5 percent advance by the NYSE Arca Networking Index.

On the other hand, energy stocks moved to the downside amid a modest decrease by the price of crude oil. Crude for May delivery dipped $0.17 to $59.60 a barrel.

Reflecting the weakness in the energy sector, the NYSE Arca Natural Gas Index slid by 1.5 percent, the NYSE Arca Oil Index fell by 1.4 percent and the Philadelphia Oil Service dropped by 1.2 percent.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly higher on Thursday, although Japan’s Nikkei 225 Index bucked the uptrend and edged down by 0.1 percent. Hong Kong’s Hang Seng Index surged up by 1.2 percent.

The major European markets also moved to the upside on the day. While the U.K.’s FTSE 100 Index advanced by 0.8 percent, the French CAC 40 Index rose by 0.5 percent and the German DAX Index crept up by 0.2 percent.

In the bond market, treasuries moved modestly higher after ending the previous session nearly flat. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, dipped 2.1 basis points to 1.632 percent.

Looking Ahead

Despite the Fed’s apparent lack of concern about inflation, trading on Friday may be impacted by reaction to a report on producer prices in the month of March.