Market Snapshot: Dow, S&P 500 jump to new records but tech stocks lag

How are benchmarks trading?

• The Dow Jones Industrial Average
  DJIA,
  +0.33%
  rose 83 points by early afternoon to 34,118, a gain of 0.2%, after notching an intraday all-time high at 34,256.75.

• The S&P 500 index
  SPX,
  +0.23%
  climbed 7 points, or 0.2%, to 4,178, after establishing an all-time intraday record at 4,187.16.

• The Nasdaq Composite Index
  COMP,
  -0.05%
  was down 5 points, or 0.04%, to 14,034.

READ: With close above 34,000, the Dow has already cleared four thousand-point mile markers in 2021

On Thursday, the Dow gained 305.10 points, or 0.9%, to finish at 34,035.99, setting a new closing record and an intraday all-time high earlier in the session. The S&P 500 added 45.76 points to reach 4,170.42, a gain of 1.1%, booking a record, while the Nasdaq Composite Index advanced 180.92 points, or 1.3%, to 14,038.76, ending 0.4% from its Feb. 12 closing record.

For the week, the Dow is up 1%, while the S&P 500 is on track for a 1.2% rise and the Nasdaq Composite is looking at a gain of 0.9%. The Dow and S&P 500 are aiming for a fourth straight weekly advance, while the Nasdaq is set for a third.

What’s driving the market?

With the recovery from the COVID pandemic on display in this week’s U.S. economic data, including retail sales and weekly jobless benefit claims, reflecting the massive fiscal stimulus from Washington and the vaccine rollout, investors are pushing the major stock indexes to new heights.

Earnings also have helped to support optimism about the recovery, as the nation’s biggest banks, Goldman Sachs Group
GS,
+0.82%
and JPMorgan Chase & Co
JPM,
+0.62%,
produced results that are promising for the American economic outlook.

It’s been “almost a goldilocks week,” Simeon Hyman, global investment strategist at ProShares, told MarketWatch Friday in a phone interview. “There’s no shortage of good news.”

Although investors have been concerned about inflation in the economic reopening, Hyman said that capacity utilization was a “little bit of help” this week as it came in “just a little lighter than expected yesterday but still expanding.”  

Capacity utilization rose to 74.4 in March, from 73.4 in February. The typical tipping point for driving “notable inflation” is 80, according to Hyman.

While the range for rates to rise is “plenty to put a dent in bonds,” Hyman said the possible higher end of rates is probably not enough to do the same for equities. That’s because rates are rising from low levels and against the backdrop of a “powerful economic recovery,” he explained.  

Hope for further improvement comes as China’s economic growth surged by 18.3% year-over-year in the first quarter, with retail sales up 34.2% in the world’s second largest economy.

“Although the year-over-year comparisons are skewed considering that China was in lockdown this time last year, it still confirms that the world’s second largest economy is making meaningful strides in the post-pandemic era,” wrote Han Tan, market analyst at FXTM.

A number of experts noted that China’s GDP growth data on a quarterly basis, however, are lower than had been expected and reflect a slackening pace of improvement.

Still, “hopes of a broad-based U.S. recovery have been fueled by yesterday’s economic releases, featuring the lowest weekly jobless claims since March 2020 and the highest monthly gain for industrial production since July,” Tan said.

Tan said that what is “crucial for investor sentiment is that this economic recovery doesn’t show signs of letting up,” including global COVID vaccinations and fiscal and monetary support, which have been supportive to the market and the economy.

That said, the head of the Centers for Disease Control and Prevention, Jose, Romero, told Bloomberg that the Johnson & Johnson’s pause in the U.S. could last for several weeks, noting that an advisory committee could review the extremely rare blood-clotting issues that have been the source of its temporary halt on April 23.

On the economic front, new-home construction surged at a seasonally adjusted annual rate of 1.74 million in March, representing a 19% jump from the previous month’s increased figure, the U.S. Census Bureau reported Wednesday. Compared with March 2020, housing starts were up a notable 37%.

Which companies are in focus?

• Morgan Stanley
  MS,
  -3.63%
  shares were down about 3% in early afternoon trading Friday, even after the company reported first-quarter profit that more than doubled and revenue that jumped 60%, boosted by strength in the institutional securities business. The bank said a single prime brokerage client cost it nearly $1 billion, leading some to believe that the bank was hit by the Archegos Capital Management implosion.

• Shares of Bank of New York Mellon Corp.
  BK,
  -4.07%
  were down about 4% Friday afternoon, after the bank reported first-quarter profit and revenue that fell from a year ago, given the impact of low interest rates, but topped expectations.

• PNC
  PNC,
  +1.83%
  reported a first-quarter net income of $1.8 billion or $4.10 earnings per share. Shares were up 2% Friday afternoon.

• Citizens
  CFG,
  
  reported first-quarter net income of $611 million and EPS of $1.37. Shares fell less than 1% by Friday afternoon.

• Eli Lilly and Co. LLY said Friday it is seeking a revocation of the emergency use authorization granted by U.S. regulators for its bamlanivimab antibody treatment for COVID-19 alone to complete the transition to bamlanivimab and etesevimab together. Shares were up 1.6% in early afternoon trading Friday.

• Biomea Fusion Inc. BMEA went public Friday, with the California-based biopharmaceutical company focused on treatment of genetically defined cancers pricing its initial public offering at the high end of its expected range at $17 a share. The stock was up less than 1% by early afternoon Friday.

• Shares of DraftKings Inc.
  DKNG,
  +1.40%.
   were almost 1% higher Friday afternoon, after it was named among a group of official sports betting partners of the National Football League.

How are other assets faring?

• The ICE U.S. Dollar Index
  DXY,
  -0.14%
   a measure of the currency against a basket of six major rivals, was down 0.2% at 91.55 on Friday afternoon.

• U.S. crude for May delivery CL.1 fell 13 cents, or 0.2%, to $63.33 per barrel on the New York Mercantile Exchange.

• The 10-year Treasury note yield BX:TMUBMUSD10Y was little-changed near 1.57%. Bond prices move inversely to yields.

• Gold futures traded higher for a second straight day, with the June contract GCM21 rising $12.10, or 0.8%, at about $1,780 an ounce, adding to its climb after touching its highest level in seven weeks.

• In Europe, the Stoxx 600 index SXXP rose 0.9% Friday to close at a record high, while London’s FTSE 100 UKX closed 0.5% higher.

• In Asia, the Shanghai Composite SHCOMP rose 0.8%, Hong Kong’s Hang Seng HSI closed 0.6% higher, and Japan’s Nikkei 225 NIK picked up 0.1%.