U.S. markets and stock exchange traded funds climbed Monday, with the S&P 500 and Dow Jones Industrial Average hitting record highs, as the services sector reflected an economy that is recovering from the coronavirus pandemic.
On Monday, the Invesco QQQ Trust (NASDAQ: QQQ) was up 2.0%, SPDR Dow Jones Industrial Average ETF (NYSEArca: DIA) rose 1.1%, and iShares Core S&P 500 ETF (NYSEArca: IVV) was1.4% higher.
An ISM survey for March showed U.S. services industry activity surged to a record high, strengthening bets that 2021 could reflect the best economic growth in nearly four decades, Reuters reports. The data also follows Friday’s report that revealed U.S. nonfarm payrolls jumped by 916,000 jobs in March, compared to expectations of 647,000 from economists.
“It was a blockbuster report on all fronts, exceeding expectations in a really big way,” Hani Redha, a portfolio manager at PineBridge Investments, told the Wall Street Journal.
The recovery in the services sector has fallen behind that of manufacturing, and investors are stilling waiting on industries like leisure, travel, and restaurants to point toward a broader economic rebound.
“Manufacturing has been strong across the board, but it is easier to switch on a factory and start making cars. What we need to see is the services picking up,” Altaf Kassam, head of investment strategy for State Street Global Advisors, told the WSJ.
After the increased distribution of Covid-19 vaccines and the latest coronavirus fiscal spending bill, investors are now looking toward progress on President Joe Biden’s multi-trillion dollar infrastructure plan and the corporate earnings season.
“Investors are more focused on strong economic growth and how that potential leads to better earnings in the future,” Robert Pavlik, senior portfolio manager at Dakota Wealth, told Reuters.
Technology stocks took the lead on Monday and were still trying to recoup their losses after the spike in Treasury yields.
“It is always an encouraging sign when the market rallies on broad economic news. Some of the tech stocks that had come under pressure are seen as may be something that has a little bit more value to them,” Pavlik added.
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