Tech rally takes Wall Street stocks to record highs
US stocks climbed to new highs on Thursday, fueled by a rally in tech names that had been broken in recent sessions.
The blue-chip S&P 500 rose 1% to close at a record high, while the high-tech Nasdaq Composite jumped 2.5% and the Dow Jones Industrial Average continued to advance into record territory.
The gains on the Nasdaq marked the last big swings in the index. It has fluctuated over the past few sessions as traders assess the outlook for stock market favorites such as Tesla, Amazon and Apple, which have thrived during the pandemic. Tesla shares rose 4.7%, while Amazon and Apple gained more than 1.5%.
The evolution of the U.S. government bond market has had a big effect on fast-growing technology companies, as higher interest rates reduce the present value of future cash flows. The 10-year Treasury yield stabilized at around 1.52% on Thursday, after peaking above 1.62% earlier this month.
“Speculative technology could well generate disproportionate long-term gains. . . but they are exposed to wild fluctuations in valuation as sentiment towards technological change or the attractiveness of other assets increases, ”said Dennis DeBusschere, Managing Director of Evercore ISI.
The Nasdaq rally also suggested that investors were looking beyond a cyclical reopening of trade that had shifted focus to companies that stand to benefit from the end of social brakes.
“If you believe that these [tech] companies have a lesser role to play in the future, so maybe you want to take your tech stocks off the table, ”said Johan Grahn, head of ETF strategy at Allianz Investment Management. “I find it hard to see for me.”
An uneventful auction of $ 24 billion of 30-year Treasuries helped to boost sentiment, easing market nervousness. Investors were angry after what BMO Capital Markets’ Ian Lyngen said was an “uninspired” 10-year auction on Wednesday. The $ 38 billion sale saw lackluster demand, although it was much stronger than the poorly offered seven-year auction that rocked markets late last month.
Investors were also weighing jobs data released Thursday morning showing that Unemployment claims in the United States last week fell to their lowest level since November, down more than analysts had expected.
The weakness of the US dollar this week continued as the currency fell 0.5% against a basket of peers. Oil hovered near a 14-month high after Brent, the international benchmark, gained 1.9% to $ 69.76 per barrel.