The Wall Street S&P 500 benchmark hit another all-time high, and commodities rebounded Thursday after the U.S. government announced the highest rate of growth in the first three months of the year since 1984.
The 0.7% rise in the S&P 500 stock index took it above the record close it achieved just two days ago, extending the rally by a year.
Strong economic growth data in the United States also pushed up the cost of raw materials. Copper traded on the London Metal Exchange above $ 10,000 a tonne, levels not seen since 2011. Brent crude, the international oil marker, gained 1.9 percent to $ 68.56 a barrel .
According to US Department of Commerce data released Thursday, the US economy grew by an annualized rate of 6.4% in the first quarter, beating the forecasts of economists polled by Reuters, who had predicted a gain of 6.1%.
In addition to being the strongest first quarter in nearly 40 years, it was the second-fastest growth of all quarters in the United States since 2003.
The data showed the economy was aided by government action, boosted by billions of dollars in federal stimulus spending and the country’s central bank continuing to signal that it will maintain significant support for monetary policy.
The Federal Reserve said on Wednesday that economic activity and employment indicators had strengthened, but the continued fragility of the labor market made it too early to withdraw its $ 120 billion in bond purchases. monthly which boosted financial markets throughout the pandemic.
Tech stocks lagged other sectors, with the high tech Nasdaq Composite index rising just 0.2% and below its all-time high as rising Treasury yields dampened corporate valuations growth.
The 10-year US Treasury yield climbed 0.03 percentage point to 1.64%, as the price of debt declined. Rapid economic growth in the United States has fueled bets on higher inflation, which is eroding fixed-rate yields.
A higher 10-year yield also tends to punish long-term growth stocks, such as tech companies, by increasing the opportunity cost of holding stocks in companies that don’t pay generous dividends.
Apple reported double-digit quarterly sales growth in an earnings report released Wednesday after trade in New York closed, while Facebook reported an increase in ad revenue.
Shamik Dhar, chief global economist at BNY Mellon, warned that while this first quarter performance was strong, he did not expect tech stocks to continue to rally as global economies reopened from lockdowns and that investors were turning away from the winners of the pandemic.
“You might see the tech indices supported for a while, but basically the story is the one that sustains cyclical businesses,” Dhar said, referring to companies such as power producers and manufacturers whose fortunes is linked to economic growth.
The dollar index, which measures the currency against those of trading partners, has been flattering, hovering around its lowest since early March.
The pound sterling climbed 0.1 percent against the dollar to close to the level of $ 1.40 last reached in early March.
As the recovery in the United States accelerates, traders expected economic progress driven by the deployment of vaccines in regions that have been slower to emerge from the pandemic, such as Europe, said Kristen Macleod , Co-Director of Global Currency Sales at Barclays.
“The dollar tends to perform well when the United States is by far the leader in global growth,” she said.
The euro was stable against the dollar on Thursday at $ 1.2128, but has gained 3.3 percent against the greenback so far this month. “It’s not that Europe is going to roar ahead, but we realized that people had gotten too bearish,” Macleod said.