Dow, S&P 500 Climb To New Record Closing Highs

After initially showing a lack of direction, stocks moved mostly higher over the course of the trading session on Friday. With the upward move, the Dow and the S&P 500 reached new record closing highs, while the Nasdaq ended the day at its best closing level in almost two months.

The major averages accelerated to the upside going into the close, ending the session near their best levels of the day. The Dow jumped 297.03 points or 0.9 percent to 33,800.60, the Nasdaq rose 70.88 points or 0.5 percent to 13,900.19 and the S&P 500 climbed 31.63 points or 0.8 percent to 4,128.80.

For the week, the Dow surged up by 2 percent, while the Nasdaq and the S&P 500 spiked by 3.1 percent and 2.7 percent, respectively.

The strength that emerged on Wall Street may have reflected continued optimism about a swift recovery by the U.S. economy.

Traders are hopeful about the economy fully reopening as the latest data from the Centers for Disease Control shows nearly 20 percent of Americans are fully vaccinated against the coronavirus.

Repeated assurances the Federal Reserve will maintain its ultra-easy monetary policy for the foreseeable future may also have generated continued buying interest.

The Fed’s apparent lack of concern about inflation helped traders shrug off a report from the Labor Department showing producer prices in the U.S. jumped by much more than expected in the month of March.

The Labor Department said its producer price index for final demand surged up by 1.0 percent in March after climbing by 0.5 percent in February. Economists had expected another 0.5 percent increase.

Excluding prices for food, energy, and trade services, core producer prices still rose by 0.6 percent in March after edging up by 0.2 percent in February. Economists had expected another 0.2 percent uptick.

Meanwhile, the Labor Department said the annual rate of producer price growth spiked to 4.2 percent in March from 2.8 percent in February.

Core producer prices in March were up by 3.1 percent compared to a year ago, reflecting a significant acceleration from the 2.2 percent increase in the previous month.

“The fiscally stimulated revival of consumer demand and strong base effects will lead to faster annual inflation rates in the spring,” said Mahir Rasheed, Associate U.S. Economist at Oxford Economics.

He added, “However, these should be temporary dynamics, and we continue to expect the Fed to remain accommodative through mid-2023.”

The Dow benefited from a strong gain by Honeywell (HON), with the conglomerate jumping by 3.4 percent after Deutsche Bank upgraded its rating on the company’s stock to Buy from Hold.

Sector News

Housing stocks moved sharply higher over the course of the session, driving the Philadelphia Housing Sector Index up by 2.2 percent.

Significant strength also emerged among retail stocks, as reflected by the 1.5 percent gain posted by the Dow U.S. Retail Index. The index reached a record closing high.

Financial, software and chemical stocks also moved to the upside on the day, while oil service stocks moved lower along with the price of crude oil.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly lower on Friday, although Japan’s Nikkei 225 Index bucked the downtrend and edged up by 0.2 percent. China’s Shanghai Composite Index slumped by 0.9 percent.

Meanwhile, the major European markets turned in a mixed performance on the day. While the U.K.’s FTSE 100 Index fell by 0.4 percent, the French CAC 40 Index inched up by 0.1 percent and the German DAX Index rose by 0.2 percent.

In the bond market, treasuries have regained ground after an initial drop but remain lower. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, is up by 2.7 basis points at 1.659 percent.

Looking Ahead

Next week’s trading may be impacted by reaction to reports on consumer prices, retail sales, industrial production and housing stocks.

The Federal Reserve is also scheduled to release its Beige Book, a compilation of economic evidence from the twelve Fed districts.

Earnings news from financial giants Goldman Sachs (GS), JPMorgan Chase (JPM), Wells Fargo (WFC), Bank of America (BAC) and Morgan Stanley (MS) may also attract attention as earnings season gets underway.