Tech and energy stocks propelled US stocks to a new high on Thursday, while government bonds rallied, in response to popular pandemic trade that relies on continued social brakes and a supportive monetary policy.
The benchmark S&P 500 broke the 4000 level for the first time, rising 1% in New York City afternoon. The technology-focused Nasdaq Composite, which is teeming with growing companies whose valuations are flattered by falling market interest rates, climbed 1.5%.
The benchmark 10-year Treasury bill yield, which rose sharply in the first quarter as investors bet on a surge in inflation as economies reopened, fell 0.06 percentage points to 1.68 %.
T-bills rally picked up slightly after report revealed new jobless claims increased by 61000 last week at 719,000, a higher reading than Wall Street’s 680,000 economists had expected.
In economic data that pointed in the opposite direction, the Institute for Supply Management revealed that manufacturing activity in the United States reached its highest level in more than 37 years last month.
But the jobs report was more relevant to stock and bond market performance, said Christian Keller, head of economic research at Barclays, as the Federal Reserve had signaled that the US central bank was unlikely to tighten. its monetary policy during unemployment. stayed high.
“The Federal Reserve will not change its rhetoric without more evidence on how the job market is likely to develop over the next six months,” he added.
Another boost to tech groups came from US President Joe Biden’s $ 2 billion infrastructure spending plan announced on Wednesday, which included large proposed investments in scientific research and broadband.
Energy stocks also rose after rising 2.3% to $ 64.93 a barrel in the price of Brent, the international benchmark.
The monthly U.S. employment report for March is expected to be released on Friday, when U.S. stock markets are closed but bond offices remain open.
The rally in Treasuries, which this year suffered one of the worst quarterly performances of this century, came as investors bought other safe-haven assets. The 10-year German Bund yield fell 0.04 percentage point to minus 0.33%. Bond yields move inversely with prices.
As the coronavirus emergency worsened in Europe, French President Emmanuel Macron ad a four-week nationwide lockdown on Wednesday night and Italy extended its limits until the end of April. The Canadian province of Ontario will also begin a 28-day lockdown starting Saturday.
For much of the past year, investors have oscillated between optimism about a post-pandemic surge in global growth and caution that the reopening of developed economies is still a long way off.
“A lot of optimism has been incorporated [to markets] since the start of the year, but it is clearly possible that we will not see the perfect reopening scenario in the second half of the year, ”said Anna Stupnytska, global macroeconomist at Fidelity International.
Risks to global growth, Stupnytska added, included the possibility of several transmissible coronavirus variants, such as a identified in Brazil, spreading in Europe while vaccine deployments remained slow.
The European Stoxx 600 stock index closed 0.6% higher at 432.2, also propelled by tech stocks and close to its pre-pandemic high of 433.9 reached in February of last year.
The dollar, measured against a basket of major currencies, fell 0.3% but remained around its highest level since November. The euro rose 0.4 percent against the dollar, buying up $ 1.177. The British pound rose by the same amount to $ 1.383.