Stocks closed higher on Wall Street on Monday, and the broad rally has helped the S&P 500 recoup more than half of its losses over the past two weeks.
The benchmark rose 1%, driven by strong gains in technology and communications companies such as Microsoft, Google’s parent company, Facebook and Twitter. Various companies that rely on direct consumer spending also made strong gains. Sectors considered safer investments, such as utilities, have fallen behind the market in general. Bond yields have fallen.
The rally marks a reversal in the recent trajectory of the market. The S&P 500 followed a record close on May 7 with two consecutive weekly declines. Investors are watching for potential signs of inflation as the economic recovery continues in the final days of the coronavirus pandemic in the United States.
Rob Haworth, senior director of investment strategy at US Bank Wealth Management, said falling bond yields had boosted the rally, particularly in tech and communications services stocks.
“You have inflation expectations coming out of the bond market and that allows for some rally,” said Haworth.
The S&P 500 Index rose 41.19 points to 4,197.05. The index is now on track for a monthly gain of 0.4%. The Dow Jones Industrial Average added 186.14 points, or 0.5%, to 34,393.98. The highly technological Nasdaq Composite gained 190.18 points, or 1.4%, to 13,661.17.
Smaller company stocks also posted gains. The Russell 2000 Index gained 12.07 points, or 0.5%, to 2,227.34.
The current earnings season is drawing to a close and companies have reported strong results for the first quarter. This has helped reaffirm Wall Street’s view that the economic recovery is strong. It has also helped justify some of the expensive values of stocks in several industries, especially tech. Investors will receive results from Dell and Salesforce.com this week, among a few others.
“Now we realize that there is still dramatic growth in earnings and fundamentals from tech and communications and growth stocks in general,” said Ryan Detrick, chief market strategist for LPL Financial.
Technology stocks were a big part of the market’s upward movement on Monday, with semiconductor companies among the big winners. Nvidia rose 4.1%, while Micron Technology added 2.7%. Among communication actions, Facebook gained 2.7% and Twitter jumped 4.8%
There are only a handful of economic reports this week, including monthly data on new home sales and prices. Investors will have another read on inflation on Friday in the form of the Commerce Department’s Consumer and Personal Expenditure Index. The “Core PCE”, as it is called, is the preferred method by Federal Reserve policymakers to measure inflation in the United States instead of the more well-known consumer price index that has been reported more. early in the month.
Economists polled by FactSet expect Core PCE to be up 3% from a year ago, which would be above the Federal Reserve’s inflation target level.
“We all expect inflation to rise because of year-over-year comparisons,” Detrick said. “The number will be higher, but the question is whether it will be hotter than expected.”
The yield on the 10-year Treasury bill fell to 1.60% from 1.63% on Friday.
Digital currencies like Bitcoin were once again volatile after falling for the past two weeks. Bitcoin climbed 17.6% to around $ 39,539, according to Coindesk. It was worth almost $ 65,000 a month ago.
Galactic Virgo jumped 27.6% after the company made its first rocket-powered flight from New Mexico to the outskirts of space in a manned shuttle over the weekend.
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