The S&P 500 and Dow Jones Industrial Average rose in a broad-based rally on Friday, with technology, healthcare, and financial stocks leading the way as investors bet on a recovery that is expected to deliver the fastest economic growth since 1984.
The S&P 500 and Dow finished a volatile week higher as investors rebalancing their portfolios at the end of the quarter continued to buy stocks that stand to benefit from a growing economy while adding some beaten-down technology shares.
The Nasdaq finished higher as less popular tech stocks advanced, but the composite index fell for the second week in a row.
Wall Street surged in the final half-hour of trading, with all three indexes rising more than 1%. The S&P 500 and Dow set new closing highs.
The Russell 1000 value index, which includes energy, banking, and industrial stocks, has gained more than 10% this year, outperforming the Russell 1000 growth index, which is just above break-even for the year.
Some tech heavyweights fell, including Tesla Inc and Google parent Alphabet Inc, but Microsoft Corp and Facebook Inc bucked the trend, helping to lift the S&P 500 and Nasdaq.
“It’s less of a shift away from technology and more of a sign of a broader appetite for equities that includes both growth and value,” said John Stoltzfus, chief investment strategist at Oppenheimer Asset Management in New York.
The Dow Jones Industrial Average gained 453.4 points, or 1.39 %, to close at 33,072.88. The S&P 500 increased by 65.02 points, or 1.66 %, to 3,974.54, while the Nasdaq Composite increased by 161.05 points, or 1.24 %, to 13,138.73.
The S&P 500 gained about 1.6 percent, the Dow gained 1.4 %, and the Nasdaq lost 0.6 % for the week.
Volume on US exchanges was 12.23 billion shares, compared to a session average of 13.67 billion over the previous 20 trading days.
L Brands gained 3.7 % after Victoria’s Secret parent company raised its current-quarter profit forecast for the second time this month, as consumers spent their stimulus checks and Covid-19 restrictions were relaxed.
The Federal Reserve raised its GDP estimate for 2021 to 6.5 percent from 4.2 percent last week, and many economists expect even faster growth, raising concerns that the economy will run too hot and force the Fed to raise interest rates.
On continued optimism about the US economy, the dollar eased but remained near four-month highs.
“In recent months, it has been difficult to limit our U.S. growth forecast. We’ve been raising our estimates almost as quickly as we were lowering them a year ago “Northern Trust’s chief economist, Carl Tannenbaum, told the Reuters Global Markets Forum.
Bank stocks rose 1.9 % after the Fed announced that, following its next round of stress tests, it would lift income-based restrictions on bank dividends and share buybacks for “most firms” in June.
The yield on benchmark 10-year U.S. Treasury notes rose to 1.66 %, down from 1.75 % last week, which sparked a selloff on inflation fears and a potential Fed rate hike, which the Fed has vowed not to do.
The market is concerned that the Fed will be forced to tighten despite its repeated assertions that it will not, according to Marvin Loh, a senior global macro strategist at State Street Global Markets.
“The real worry is that things will overheat and the Fed will be forced to change its mind,” he said.
Energy stocks rose 2.6 % tracking a rise in crude prices following the blockage of the Suez Canal, which fueled fears of a supply crunch. [O/R] formalized
Only the communication services index fell among the 11 major S&P sectors.
Nio Inc fell 4.8 % after the Chinese electric vehicle manufacturer announced a five-day production halt at its Hefei plant due to a semiconductor chip shortage.
Consumer spending in the US fell by the most in ten months in February, according to the most recent data, as a cold snap gripped many parts of the country and the boost from a second round of stimulus checks faded, though the drop is likely to be temporary.
On the NYSE, advancers outnumbered decliners by a 3.30-to-1 ratio on the Nasdaq, advancers outnumbered decliners by a 1.81-to-1 ratio.
The S&P 500 set 65 new 52-week highs but no new lows, while the Nasdaq Composite set 82 new highs but 51 new lows.
