U.S. Stocks Climb to Records on Signs of an Economic Rebound
Data on the services sector show improvement
By and Updated April 5, 2021 4:26 pm ET
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The Dow Jones Industrial Average and S&P 500 surged to records on Monday as a strong jobs report and data showing a rebound in the services sector cheered investors hoping for a robust economic recovery.
The Dow gained 373.98 points, or 1.1%, to close at 33527.19. The broad S&P 500 climbed 58.04 points, or 1.4%, to 4077.91.
The technology-heavy Nasdaq Composite advanced 225.49 points, or 1.7%, to 13705.59.
With the U.S. stock market closed Friday, it was the market’s first reaction to the latest jobs report, which showed that U.S. hiring jumped in March. Employers added a seasonally adjusted 916,000 jobs last month, the best gain since August. The fast pace of hiring has bolstered hopes for a strong economic rebound, and it could continue driving investors to stocks hardest hit by the Covid-19 pandemic.
Many businesses laid off workers last year as state and local governments imposed measures to contain the spread of the coronavirus. New applications for unemployment benefits have trended down since then and Friday’s report offered signs that hiring may be picking up again.
“It was a blockbuster report on all fronts, exceeding expectations in a really big way,” said Hani Redha, a portfolio manager at PineBridge Investments.
Other data released Monday showed the U.S. services sector continuing to make gains after it was battered by shutdowns, stay-at-home orders and consumer caution stemming from the pandemic.
The Institute for Supply Management’s services index rose to an all-time high of 63.7 in March from 55.3 in February, ahead of economists’ forecast of 59.2. Any reading above 50 indicates an expansion. Recovery in services has lagged behind that of manufacturing, and investors have been watching for a pickup in industries like leisure, travel and restaurants to indicate a broader economic rebound.
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“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,” said Altaf Kassam, head of investment strategy for State Street Global Advisors in Europe.
Stocks that were hammered by the pandemic, like airlines and cruise-line operators, posted solid gains on Monday. Delta Air Lines, Southwest Airlines and United Airlines were all up more than 2.5%.
Norwegian Cruise Lines shot up $1.99, or 7.2%, to $29.71 after it asked health officials to let it resume sailing from U.S. ports, while Carnival shares gained $1.25, or 4.7%, to $28.11. The Centers for Disease Control and Prevention issued updated guidance Friday that will make it easier for cruise lines to begin returning to normal operations.
“Without a doubt, the reopening trade remains in good order,” said Hans Olsen, chief investment officer of Fiduciary Trust.
A faster-than-anticipated vaccine rollout and stimulus spending from President Biden’s $1.9 trillion coronavirus relief bill have also helped propel the stock market to new highs.
Some investors have worried that the pace of growth and torrent of government spending could spur inflation, prompting the Federal Reserve to tighten monetary policy. Fed officials have said they are looking for recovery in the jobs market, alongside sustained 2% inflation, before changing interest rates or altering bond purchases.
On Monday, the yield on the 10-year Treasury note slipped to 1.718% from 1.721% Friday. Bond yields fall when prices rise.
Yield on 10-Year Treasury Note
Source: Tullett Prebon
%
Pre-pandemic peak of S&P 500
2020
'21
0.25
0.50
0.75
1.00
1.25
1.50
1.75
2.00
Ten of the S&P 500’s 11 sectors rose, reflecting a broad rally that included robust gains in economically sensitive sectors like consumer-discretionary, industrials and materials stocks, as well as tech.
The only sector to post a loss was energy, which was dragged down by a drop in the price of oil. Futures on Brent crude, the international benchmark, slumped 4.2% to $62.15 a barrel as countries including India and China reported a spike in coronavirus cases that could lead to another drop in global oil demand.
GameStop fell $4.50, or 2.4%, to $186.95 a share after it announced plans to sell up to 3.5 million shares of its common stock. Shares of the videogame retailer slid as much as 14% in morning trading before paring losses. The stock has been on a wild ride this year amid a frenzy of trading by individual investors fueled by social media.
Overseas, major markets in Europe were closed for the Easter holiday, while markets in China and Hong Kong were closed for the Qingming Festival. South Korea’s Kospi rose 0.3%, and Japan’s Nikkei 225 added 0.8%.
Traders worked on the floor of the New York Stock Exchange on Wednesday.
Photo: Nicole Pereira/Associated Press
Write to Caitlin Ostroff at
caitlin.ostroff@wsj.com and Alexander Osipovich at alexander.osipovich@do