Major indexes posted quarterly gains, with the Dow up 7.8%, the S&P 500 up 5.8% and the Nasdaq up 2.8%. The small-cap Russell 2000 RUT, +1.50% jumped more than 12%.

Read: The Dow just beat the Nasdaq by the widest margin in a month since 2002. Here’s how stocks tend to perform afterward

What’s driving the market?

Investors on Thursday digested President Joe Biden’s $2.3 trillion infrastructure plan announced late Wednesday as well as data on the U.S. manufacturing sector and weekly jobless benefit claims.

While tech shares rose Thursday, more cyclically sensitive stocks outpaced tech and other growth stocks in the first quarter as investors reacted to aggressive fiscal stimulus efforts that have fueled expectations for a near-term boom in economic growth and the potential for a sharp rise in inflationary pressures.

Biden’s infrastructure proposal is offset by tax hikes, including a rise in the corporate tax rate to 28% from 21%, an increase in the global minimum tax on U.S. multinational companies, the establishment of what’s called a 15% minimum tax on book income, the elimination of tax preferences for fossil fuels and an increase in enforcement on corporations.

Although the infrastructure plan “is good news for the economy and it seems to be a supportive development for equities, it would be interesting to wait and see whether this will revive fears of an overheating economy,” said Charalambos Pissouros, senior market analyst at JFD Group, in a note.

Investors will be also keeping a close eye on developments on the tax front, analysts said. “The larger impact to markets will be whether or not the corporate tax rate is raised to 28% — or somewhere in between there and the current 21% level — and whether or not a global minimum tax on corporations can be established,” said Chris Zaccarelli, chief investment officer for the Independent Advisor Alliance, in emailed comments.

“It’s likely that the stock market can withstand a hike in the corporate tax rate to 25%, but unclear how much room there is above that if stocks are going to keep moving higher between now and year-end,” said Zaccarelli.

In U.S. economic data on Thursday, Institute for Supply Management’s manufacturing activity showed rose to 64.7% from 60.8% in the prior month, marking the highest reading since 1983. The report followed IHS Markit’s U.S. Manufacturing Purchasing Managers’ Index, which came in at 59.1 in March, up from 58.6 in February, marking the second-highest level on record. For both gauges, a reading above 50 indicates growth in activity.

“The manufacturing economy is humming, fueled by strong consumer demand for a range of goods. Given expectations for the economy to grow at vigorous pace this year, the outlook for the sector remains strong,” said Jim Baird, chief investment officer at Plante Moran Financial Advisors.

On the U.S. labor market front, initial jobless claims jumped 61,000 to 719,000 in the week ended March 27, the U.S. Labor Department reported.

However, some analysts are forecasting that claims and overall employment will fall again soon as the economy speeds up, governments loosen restrictions and companies seek to hire more workers.

The claims numbers came ahead of Friday’s eagerly awaited March jobs report, which could show that the U.S. added a million or more jobs based on some optimistic estimates.

Which companies are in focus?

• Shares of Micron Technology Inc. MU, +4.76% closed up 4.8% after the Boise, Idaho-based chip maker’s earnings and outlook topped Wall Street estimates.
• Separately, Micron and Western Digital Corp.  WDC, +6.92% are each exploring a potential deal for Kioxia Holdings Corp. that could value the Japanese semiconductor company at around $30 billion, The Wall Street Journal reported. Western Digital shares were up 6.9%.
• Dave & Buster’s Entertainment Inc. PLAY, -5.41% late Wednesday said its fourth quarter was “severely impacted” by the pandemic but swung to a narrower-than-expected quarterly loss and reported sales that came in above expectations. Shares fell 5.4%.
• Johnson & Johnson Inc. JNJ, -0.92% on Wednesday acknowledged a batch of its COVID-19 vaccine produced by one of its manufacturing partners “did not meet quality standards,” and said it would provide more experts to oversee production. Johnson & Johnson shares finished down 0.9%.
• Frontier Group Holdings Inc. the parent of low-cost carrier Frontier Airlines, said its initial public offering priced at $19 a share, the low end of a $19 to $21 price range.
• Residential real-estate brokerage Compass priced its initial public offering at $18, the low end of an already reduced range. Compass had cut its price range to an $18-$19 range from $23 to $26, and cut the number of shares on offer to 25 million from 36 million.
• Movie chain and meme stock AMC Entertainment Holdings AMC, -8.33% execs said that they would offer 500 million share offering. Shares closed down 8.3% Thursday.
• Microsoft MSFT, +2.79% rose 2.8% after the company’s multibillion-dollar deal to build customized versions of its HoloLens goggles for the U.S. Army was announced Wednesday.

How are other assets faring?

• The yield on the 10-year U.S. Treasury note  TMUBMUSD10Y, 1.675%, slid 6.9 basis points to 1.680%. Yields and bond prices move in opposite directions.
• The ICE U.S. Dollar Index DXY, a measure of the currency against a basket of six major rivals, was off 0.3% at 92.93.
• Oil futures  CL.1, +3.52%  rose $2.29, or 3.9%, to settle at $61.45 a barrel on the New York Mercantile Exchange.
• Gold futures traded higher. The April contract GCJ21 climbed $12.80, or nearly 0.8%, to settle at $1,728.40 an ounce, after a 1.8% gain a day ago.
• In Europe, the Stoxx 600 index SXXP rose 0.7%, while London’s FTSE 100 UKX closed up 0.4%.
• In Asia, the Shanghai Composite SHCOMP advanced 0.7%, Hong Kong’s Hang Seng Index HSI rallied 2% and Japan’s Nikkei 225 NIK closed up 0.7%.