Wall Street rejoices: S&P 500 and Dow rally to close at all-time highs

THE S&P 500 and Dow Jones Industrial Average closed at a record highs on Monday as investors eyed an economic recovery from the coronavirus and awaited cues from the Federal Reserve this week amid caution over rising borrowing costs.

The Dow Jones Industrial Average rose 0.53% to end at 32,953.46 points, while the S&P 500 gained 0.65% to 3,968.94. The Nasdaq Composite climbed 1.05% to 13,459.71 but remains down almost 5% from its Feb 12 record high close.

Gains in the major indexes accelerated near the end of the trading session.

In a concrete sign that the worst of the damage from the coronavirus pandemic may be over for the airline industry, Delta Air Lines, Southwest Airlines and JetBlue Airways said leisure bookings were rising.

The S&P 1500 airlines index jumped over 4% to a one-year high, while other travel-related stocks jumped between 2% and 5%.

Nine of the 11 major S&P sector indexes rose, led by utilities and real estate, each up more than 1%.

It was the Dow’s sixth straight record high close in a recent surge fuelled by mass vaccinations and congressional approval of a US$1.9 tril aid bill. Expectations of a recovery accelerated demand for stocks expected to outperform as the economy reopens such as banks, energy, materials companies.

On Monday, the Russell growth index outperformed the Russell value index in a modest reversal of investors’ recent trend away from technology and other high-growth stocks.

“With the vaccine positive news and the stimulus, we think there will continue to be a fair amount of rotation out of the stay-at-home stocks,” said Greg Bassuk, CEO of AXS Investments. “We are bullish on financial services and energy coming out of the pandemic.”

The S&P 500 has gained almost 6% in 2021 while the Dow has added nearly 8%.

At the end of Fed’s two-day meeting on Wednesday, policymakers are expected to forecast that the US economy will grow in 2021 at its fastest rate in decades while reiterating their dovish stance for the foreseeable future.

The yield on benchmark 10-year Treasuries ticked lower to 1.60% below its 13-month peak of 1.64% on Friday. Wall Street has been roiled in recent weeks by a spike in longer-dated US bond yields due to fears of an increase in inflation.

Volume on US exchanges was 12.5 billion shares, compared with the 14.5 billion average for the full session over the last 20 trading days.

Tesla rose about 2% after the company dubbed chief executive Elon Musk “Technoking of Tesla” in a formal regulatory filing.

Advancing issues outnumbered declining ones on the NYSE by a 1.78-to-1 ratio; on Nasdaq, a 1.35-to-1 ratio favoured advancers.

The S&P 500 posted 90 new 52-week highs and no new lows; the Nasdaq Composite recorded 281 new highs and 15 new lows. – March 16, 2021

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