U.S. markets and stock exchange traded fund rallied Thursday, with the S&P 500 and Dow Jones Industrial Average reaching toward record highs. Technology stocks surged as concerns over rising inflation abate.
On Thursday, the Invesco QQQ Trust (NASDAQ: QQQ) was up 2.6%, SPDR Dow Jones Industrial Average ETF (NYSEArca: DIA) gained 0.9%, and iShares Core S&P 500 ETF (NYSEArca: IVV) was 1.4% higher.
A bigger-than-expected dip in weekly jobless claims also fueled expectations of a labor market recovery as falling coronavirus cases allow for more segments of the economy to reopen, Reuters reports.
“The drop in jobless claims is another win for the week, and a solid sign that we’re making some strides toward pre-pandemic life,” Mike Loewengart, managing director of investment strategy at E*TRADE Financial, told Reuters.
Meanwhile, yields on benchmark 10-year Treasuries held below the 1-year high of 1.6% ahead of an auction for 30-year debt.
“The markets appear to have mostly adjusted (to higher yields). However, we still need to see how the market digests the 30-year auction today,” Eric Merlis, head of global markets trading at Citizens, told the Reuters Global Markets Forum.
Monica Defend, head of research at French asset manager Amundi, believes that bond yields will likely remain volatile and contribute to further shifts between the growth and value segments.
“Eventually it should be positive for the equity market if we have a bit more inflation, a bit more growth,” Defend told the Wall Street Journal.
The muted inflation data has helped calm market fears and fuel the rebound in growth stocks. This week, new data revealed that the consumer-price index, which measures what consumers pay for everyday items, rose a seasonally adjusted 0.4% in February, in line with experts’ expectations.
Many previously feared that the size of the latest stimulus package would supercharge inflation beyond the Federal Reserve’s 2% target and trigger interest rates hikes. Meanwhile, optimism over the broad economic outlook has added to demand for economically sensitive companies that most benefit from a return to pre-COVID normalcy.
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