Stocks rose to record levels Thursday as investors digested another batch of key economic data and an announcement from President Joe Biden that he had reached a bipartisan infrastructure agreement with Senate lawmakers.
The S&P 500 and Nasdaq each set record intraday highs. The Dow extended gains to add more than 300 points, or nearly 1%.
Technology stocks have outperformed this week, with traders jumping back into the growth names that had underperformed so far for the year-to-date.
The advance in these has come at the expense of cyclical and value stocks and other shares that have comprised the "reopening trade," however. This rotation has occurred in part as concerns mount over higher inflation, with an extended period of higher prices potentially weighing on the strength of the economic recovery and stocks levered to economic growth.
Some strategists however, have downplayed these apprehensions.
"The value trade is still intact. It got overcrowded, it got over-loved ... but when we look at the fundamental drivers behind that trade, they're still intact," Keith Lerner, Portfolio & Market Strategist at Truist Advisory Services, told Yahoo Finance.
"So the first thing is, context. Yes, they had a big run this year, but they've trailed for about 14 years, so we've had a long underperformance cycle," he added. "And the second part is, why did they underperform for so long is because we had really slow economic growth. And this year and next we expect above-trend economic growth. And the earnings momentum and the earnings leverage for these areas is still positive."
While some rotation has occurred beneath the surface this week, the three major indexes have largely moved sideways as traders await more economic and earnings data. Thursday's weekly initial jobless claims report showed a drop in new unemployment filings after last week's unexpected uptick, though the margin of improvement was much smaller than expected. And Friday's personal consumptions expenditures (PCE) report will likely show headline inflation rose at the fastest pace in 13 years in May, in the latest sign of upward inflationary pressures.
These and other reports in the coming months could be crucial in determining the path forward for equities, as investors gauge what level and duration of inflation might prompt a monetary policy move by the Federal Reserve.
"There is going to be some volatility – I think it's going to probably be driven by action from the Fed," Greg Staples, head of fixed income North Americas at DWS Group, told Yahoo Finance on Wednesday. "But I think the real question over the next couple of months is, watch those CPI [consumer price index] prints, watch those PPI [producer price index] prints, meaning the data indicators as to where inflation is going to be."
"If they start to turn down and justify what [Fed Chair Jerome] Powell has been saying all along, that inflation is transitory, I think that's going to be a positive for the market, and I think you'll see a continued upside reaction," he added. "If on the other hand, they start to run hot, and there's a sense that maybe the Fed is really going to have to step in and tighten, you're going to potentially see another leg up in interest rates. And I personally think that would be very, very, bad for risk assets, equities included."
4:17 p.m. ET: Microsoft closes above $2 trillion market capitalization for the first time ever
The company recently debuted a new version of its Windows operating system, called Windows 11. It has benefited over the course of the pandemic from adoption of its Teams platform, as well as ongoing growth in its Azure cloud offering.
4:09 p.m. ET: Stocks end higher amid infrastructure deal, economic optimism; S&P 500 and Nasdaq reach record highs
Here were the main moves in markets as of 4:09 p.m. ET:
S&P 500 (^GSPC): +24.65 (+0.58%) to 4,266.49
Dow (^DJI): +322.58 (+0.95%) to 34,196.82
Nasdaq (^IXIC): +97.98 (+0.69%) to 14,369.71
Crude (CL=F): +$0.18 (+0.25%) to $73.26 a barrel
Gold (GC=F): -$8.80 (-0.49%) to $1,774.60 per ounce
10-year Treasury (^TNX): 0 bps to yield 1.4870%
12:50 p.m. ET: Biden says he's reached bipartisan infrastructure agreement with Senators
President Joe Biden said Thursday afternoon in a Twitter post that he "struck a deal" with a bipartisan group of senators over an infrastructure package.
The group, consisting of five Democrats and five Republicans in addition to Biden, have "forged an infrastructure agreement that will create millions of American jobs," according to the tweet.
10:10 a.m. ET: BuzzFeed announces it will go public through SPAC merger
BuzzFeed announced Thursday it will go public via a SPAC merger with 890 5th Avenue Partners Inc., becoming the latest corporation to eschew the traditional initial public offering process.
The media company would be valued at $1.5 billion through the deal. The company was previously valued in private markets at $1.7 billion in 2016, following a $200 million investment from Comcast's NBCUniversal.
9:30 a.m. ET: Stocks open higher, S&P 500 and Nasdaq hit records
Here's where markets were trading after the opening bell Thursday morning:
S&P 500 (^GSPC): +21.93 (+0.52%) to 4,263.77
Dow (^DJI): +166.52 (+0.49%) to 34,040.76
Nasdaq (^IXIC): +90.09 (+0.63%) to 14,361.82
Crude (CL=F): -$0.36 (-0.49%) to $72.72 a barrel
Gold (GC=F): +$1.80 (+0.10%) to $1,785.20 per ounce
10-year Treasury (^TNX): -0.5 bps to yield 1.4820%
9:25 a.m. ET: Durable goods orders rebounded in May but missed consensus expectations
Durable goods orders, or orders for manufactured items intended to last three years or longer, jumped in May after a dip in April, but rose at a slower-than-expected pace as supply chain issues continued to weigh.
Durable goods orders rose by 2.3% in May over April, according to the Commerce Department's preliminary monthly report. This came following a 0.8% drop in April, which was revised from the 1.3% drop previously reported.
Non-defense capital goods orders, excluding aircraft, unexpectedly fell for the first time since February, ticking down by 0.1% compared to the 0.6% increase expected, according to Bloomberg consensus data. This metric serves as a closely watched proxy of business investment. Non-defense capital goods orders, excluding aircraft, were up 0.9%, which was better than the 0.8% rise expected for May. This metric is factored into calculations of gross domestic product.
8:30 a.m. ET: New jobless claims fell by a smaller than expected margin last week, holding above 400,000
Initial unemployment claims held above the psychologically important 400,000 level for a back-to-back week during the period ended June 19, underscoring the still-choppy recovery in the U.S. labor market.
Initial filings totaled 411,00 last week, coming in above the 380,000 expected. This did decline from the 418,000 reported for the prior week, which was revised up from the 412,000 previously reported.
Continuing claims showed more improvement, dropping to the lowest level since March 2020. These totaled 3.39 million, coming in below the 3.46 million expected and 3.534 million reported for the previous week.
7:15 a.m. ET Thursday: Stock futures gain
Here's where markets were trading ahead of the opening bell:
S&P 500 futures (ES=F): 4,252.25, +20.75 points (+0.49%)
Dow futures (YM=F): 33,937.00, +178 points (+0.53%)
Nasdaq futures (NQ=F): 14,342.25, +79.25 points (+0.56%)
Crude (CL=F): -$0.20 (-0.27%) to $72.88 a barrel
Gold (GC=F): -$0.40 (-0.02%) to $1,783.00 per ounce
10-year Treasury (^TNX): +0.2 bps to yield 1.489%
6:14 p.m. ET Wednesday: Stock futures tick up
Here's where markets were trading Wednesday evening:
S&P 500 futures (ES=F): 4,235.00, +3.5 points (+0.08%)
Dow futures (YM=F): 33,795.00, +36 points (+0.11%)
Nasdaq futures (NQ=F): 14,277.75, +14.75 points (+0.1%)
Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter: @emily_mcck
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