Tech shares push S&P 500 to another record after Powell asserts dovish tone

How are stock benchmarks faring?

• The Dow Jones Industrial Average
  DJIA,
  +0.17%
  added 57.31 points, or 0.2%, to finish at 33,503.57.
• The S&P 500
  SPX,
  +0.42%
  rose 17.22 points to reach about 4,097.17, a gain of 0.4%, hitting a new record close, and earlier establishing an intraday record at 4,098.19.
• The Nasdaq Composite Index
  COMP,
  +1.03%
  advanced about 140.47 points, or 1%, at 13,829.31.

On Wednesday, the S&P 500 added 6.01 points, or 0.2%, enough to finish at a record 4,079.95, its 18th of the year. The Dow rose 16.02 points, or 0.1%, to close at 33,446.26, its second-highest finish ever, the Nasdaq Composite shed 9.54 points, or 0.1%, ending at 13,688.84, while booking a second day in a row of losses. The small-cap oriented Russell 2000 index
RUT,
+0.88%
slumped 1.6% to close at 2,223.05.

What’s driving the market?

Stock investors received a boost this month as the surge in U.S. Treasury yields that had rattled markets earlier this year showed signs of losing momentum.

“The biggest thing in April that’s driving markets to new record highs is the fact that 10-year Treasury yields have seemed to plateau,” Michael Arone, chief investment strategist for the U.S SPDR business of State Street Global Advisors, told MarketWatch in a phone interview Thursday. The rise in yields in March had “unnerved investors,” particularly in growth stocks, he explained.

But now, in early April, 10-year Treasury yields have stopped climbing higher, despite signs of a strengthening economy, Arone said. “That’s given investors a bit of relief,” he added and helped to boost technology stocks again. The 10-year Treasury note yield TMUBMUSD10Y slipped 2.1 basis points to 1.632% Thursday, its lowest since March 25.

Fed Chairman Powell repeated his expectation that a rise in inflation this year would be temporary at  a webinar on the global economic outlook hosted by the International Monetary Fund on Thursday. His comments come a day after minutes from the Fed’s March policy meeting were released showing concerns about the recovery in the job market and the need to keep monetary policy easy until there is more progress towards the Fed’s unemployment goal.

So weak labor-market data reported Thursday failed to undermine the market’s bullish bias with weekly jobless benefit claims showing a rise of 16,000 to 744,000, above expectations for 694,000 from economists surveyed by Dow Jones. Claims were raised to 728,000 in the prior week from the prior estimate of 719,000.

“So while states balance the vaccine rollout with stop and start reopening plans, the labor market continues to feel the heat. But the disappointing read actually puts some firepower behind the Fed’s accommodative stance,” wrote Mike Loewengart, managing director investment strategy at E-Trade Financial.

Continuing claims dropped 16,000 to 3.73 million, marking the lowest level for that measure of employment since March 21, 2020.

“We expect the market to keep moving slowly higher on good economic news, but since most of that news is already priced in, a big move higher (or a big move lower) will only happen if there is a significant bump to the upside (or unexpected drop to the downside) in a major piece of economic news, such as the quarterly GDP number that will be released at the end of April,” wrote Chris Zaccarelli, Chief Investment Officer for Independent Advisor Alliance in a note after the jobless claims data.

Which companies are in focus?

• Canopy Growth Corp. 
  CGC,
  -4.81%
  said Thursday that it will acquire Toronto-based Supreme Cannabis Co. Inc. 
  SPRWF,
  +53.86%,
   in a stock and cash deal valued at about C$435 million ($345.6 million). Canopy’s shares closed down 4.8%.
• Telsa Inc.
  TSLA,
  +1.91%
  has expressed frustration with red tape it says is hampering the construction of a new gigafactory outside the German capital Berlin, and has now offered its own reform proposals to the German authorities, AFP reported.
• Shares of Valero Energy Corp. 
  VLO,
  -2.06%
  fell 2.1% Thursday, after the maker of transportation fuels and petrochemical products provided a downbeat outlook for the first quarter, citing higher-than-expected costs resulting from the impact of Winter Storm Uri on its refining and ethanol business.
• Constellation Brands Inc. 
  STZ,
  -4.57%
  slid 4.5% after it posted stronger-than-expected earnings for its fiscal fourth quarter Thursday although profit fell from the year-earlier period.
• Cloud company Box Inc. 
  BOX,
  -9.35%
  said Thursday it has reached an agreement with private-equity firm KKR
  KKR,
  +1.10%
   in which KKR funds will lead a $500 million investment in the company in the form of convertible preferred stock. Box shares fell 9.4%.
• Shares of GameStop Corp. 
  GME,
  -4.33%
  slid 4.3% Thursday after the videogame and consumer electronics retailer said it plans to name Ryan Cohen as chairman of the board. Kathy Vrabeck is currently board chair.
• Shares of Conagra Brands Inc.
  CAG,
  +0.16%
   edged up 0.2%, after the food company, which brands include Birds Eye, Healthy Choice, Slim Jim and Reddi-wip, reported fiscal third-quarter profit and sales that rose above expectations.

How are other assets faring?

• The ICE U.S. Dollar Index DXY, a measure of the currency against a basket of six major rivals, was down 0.4% at 92.08.
• U.S. crude
  CL.1,
  +0.12%
  for May delivery fell 17 cents per barrel, or 0.3%, to $59.60 today.
• The 10-year Treasury note yield
  TMUBMUSD10Y,
  1.636%
  fell 2.1 basis points to 1.632%%. Bond prices move inversely to yields.
• Gold futures finished higher, with the June contract GCM21climbing $16.60, or nearly 1%, to settle at $1,758.20 an ounce on Comex, around a six-week high.
• In Europe, the Stoxx 600 index SXXP gained 0.6%, and London’s FTSE 100 UKX rose 0.8%.
• In Asia, the Shanghai Composite SHCOMP finished 0.1% higher, Hong Kong’s Hang Seng HSI closed up 1.2%, while Japan’s Nikkei 225 NIK edged down less than 0.1%.