S&P 500, Nasdaq Composite Edge Higher
By Joe Wallace and Karen Langley
Major U.S. stock indexes hovered in record territory Tuesday
after signs of rapid economic recovery propelled them to all-time
highs a day earlier.
The S&P 500 edged up 0.1%, putting it on pace for another
record close. The Dow Jones Industrial Average slipped 0.1% after
notching its 18th closing record of 2021 on Monday. The tech-heavy
Nasdaq Composite added 0.4% but remains down about 2.4% from its
Stocks have leapt to start the second quarter on optimism that
government spending, vaccinations and the relaxation of
restrictions are unleashing a spell of swift economic growth. A
series of data have offered evidence that a rebound in activity and
hiring is under way a year after the pandemic slammed the brakes on
"There's a willingness as the economy reopens for people to get
out and about," said Keith Gangl, portfolio manager at Gradient
Investments. "I think the economy's going to continue to reopen
faster than people expected."
Investors are betting that sectors such as banking and mining
will benefit from the reopening, and technology stocks have climbed
after wobbling at times in the first quarter. The gains Tuesday
were broad, with nine of the S&P 500's 11 sectors
"It looks like the U.S. [economy] has just hit the accelerator,"
said Brian O'Reilly, head of market strategy for Mediolanum
International Funds. The recent rally shows signs of being broad
and isn't just concentrated in economically sensitive sectors that
suffered most from the pandemic in 2020, he added. "We've certainly
seen a moderation in the one-way bet that was being placed until
maybe the middle of March."
The International Monetary Fund on Tuesday raised its
projections for global economic growth for this year and next,
citing stimulus spending by the U.S. and other rich nations and the
accelerating rollout of Covid-19 vaccines.
Yet investors say there remains ground for caution, pointing to
risks such as the potential for fresh volatility in the U.S.
government-bond market as well as a pickup in coronavirus cases.
Some worry that a spurt of inflation will prompt the Federal
Reserve to raise interest rates before its projections indicate,
pulling back some of the monetary stimulus that helped to power
markets higher for the past year.
"The main risk is still a reversal in Fed language," Mr.
O'Reilly said, adding that he is also keeping a close eye on an
increase in cases of Covid-19 in the U.S.
The country reported more than 78,000 new cases for Monday,
according to data from Johns Hopkins University. The seven-day
average is above the 14-day average, indicating that cases are
rising, according to a Wall Street Journal analysis.
In bond markets, the yield on 10-year U.S. Treasury notes
dropped to 1.663%, from 1.718% Monday. Yields fall when prices
Among individual stocks, shares of Illumina rose 8.5% after the
genetic-sequencing firm said it expected revenue to grow by a
quarter or more in the 2021 fiscal year.
Oil prices regained some ground after slumping on concerns that
coronavirus outbreaks in India, Europe and other major economies
will weigh on demand. Futures for West Texas Intermediate, the main
grade of U.S. crude, rose 3.1% to $60.45 a barrel.
Indirect nuclear negotiations between the U.S. and Iran in
Vienna starting Tuesday may also weigh on sentiment in oil markets.
A diplomatic breakthrough would likely lead to a large increase in
Iranian crude exports in the second half of the year, RBC Capital
Markets strategist Helima Croft wrote in a note to clients. That
could boost global supplies and dent prices.
In overseas markets, European stocks played catch-up with Wall
Street after bourses in the region were closed Monday. Shares of
basic-resource companies and makers of cars and car parts led broad
gains, pushing the Stoxx Europe 600 up 0.7%.
In Asian markets, Japan's Nikkei 225 fell 1.3%, and the Shanghai
Composite Index ended the day relatively flat.
Write to Joe Wallace at Joe.Wallace@wsj.com and Karen Langley at
(END) Dow Jones Newswires
April 06, 2021 11:52 ET (15:52 GMT)
Copyright (c) 2021 Dow Jones & Company, Inc.