Stocks rose Thursday, pushing the S&P 500 index and Nasdaq Composite to all-time highs, after a round of upbeat earnings reports from technology heavyweights and as investors weighed dovish remarks by Federal Reserve Chairman Jerome Powell, President Joe Biden’s rollout of a $1.8 billion package of additional government spending, and data showing the U.S. economy grew up 6.4% at annual rate in the first quarter.
What are major benchmarks doing?
On Wednesday, stocks ended with small losses following the Fed meeting, after the S&P 500 notched an intraday record. The Dow fell 164. 55 points, or 0.5%, while the S&P 500 ended 0.1% lower and the Nasdaq Composite lost 0.3%.
What’s driving the market?
Corporate earnings remain strong, with Apple Inc.
AAPL,
Thursday is the busiest day of the quarterly earnings reporting season, with roughly 11% of the S&P 500 index due to publish updates. Caterpillar, McDonald’s, Comcast and Merck reported before the market opened. Amazon and Twitter will post results after the market closes.
Currently about 86% of the S&P 500 companies that have reported beaten estimates, with earnings coming in 22.7% above expectations, according to data from Refinitiv. For revenue, 77% of companies have exceeded expectations.
“This week’s steady but notable rise in Treasury yields could be weighing on U.S. equities and if Apple’s earnings beat is unable to set Wall Street alight, it doesn’t bode well for the rest of the earnings season,” said Raffi Boyadjian, senior investment analyst at XM, in a note.
Treasury yields slipped Wednesday afternoon after the Federal Reserve and Powell struck a dovish tone, but edged higher again Thursday morning. The yield on the 10-year Treasury note BX:TMUBMUSD10Y rose 2.7 basis points to 1.65%.
Rising yields can be a headwind, particularly for growth oriented stocks. A rise in yields in March was credited with adding fuel to a rotation away from tech stocks and other highfliers into more cyclical stocks poised to benefit from the reopening of the economy.
Stocks edged higher during Powell’s news conference, with the S&P 500 hitting an all-time high, but ended the day slightly lower.
“With no meaningful change to monetary policy or communication, this meeting was simply a message to market participants to sit back and observe as the economic recovery continues to unfold,” said Charlie Ripley, senior investment strategist for Allianz Investment Management.
“For now, the Fed is maintaining a tight grip on the bond market, but it appears like a discussion on tapering bond purchases is right around the corner,” he said, in emailed comments.
Late Wednesday Biden, in an address to a joint session of Congress, called for bigger government investment in the economy, including a $1.8 trillion proposal for additional spending on child care, education and paid leave partly offset by higher taxes on wealthy Americans.
In U.S. economic data, first-time jobless benefit claims fell to 553,000 last week from a revised 566,000 a week earlier, the Labor Department said Thursday. With revisions, the reading was the lowest level of claims since the pandemic struck last year.
Gross domestic product, the official scorecard for the U.S. economy, rose at a 6.4% annual pace in the first quarter, the government said Thursday.
“America’s economy came out swinging at the start of 2021,” Ulas Akincilar, Head of Trading at the online trading provider, INFINOX, said. ““The surge in GDP is the product of a boom in consumer spending, in turn fired by a combination of fiscal stimulus and the easing of lockdown restrictions,” he added. ““With 98 million Americans now fully vaccinated against Covid-19, and US businesses unlocking steadily, the recovery is hitting its stride nicely.”
A March pending home sales index is scheduled for release at 10 a.m.
Which companies are in focus?
What are other markets doing?