Stocks rallied on Thursday, with the broader market reaching a new record while technology and blue-chip stocks flirting with recent records, as investors brace themselves for the flood of first-quarter earnings likely to show Corporate America coasting on an incipient economic boom.
Technology stocks outperformed, leading the Nasdaq to its best close since February and S&P 500 to a fresh peak, , Shares of Alphabet (GOOGL), Microsoft (MSFT) and Facebook (FB) each also hit all-time highs. Meanwhile, the Dow edged higher in quiet trading, closing just shy of its intraday record near 33,618.
Since scaling to new highs last week, stocks have been trading in a holding pattern for much of this week. Risk assets got a small boost after the Federal Reserve signaled in its March meeting minutes that most monetary policymakers favored keeping monetary policy highly accommodative as the economic recovery continues, signaling that they will hold off on tightening at the first signs of inflation during the rebound.
"A big part of this is making sure the vaccine-led recovery is firmly rooted, and that won't be clear until somewhere in the second half of this year. So it's possible that as we look out to the late summer timeframe or early fall that that's something that we could consider at that point," Jeffrey Kleintop, Charles Schwab chief global investment strategist, told Yahoo Finance.
"But until then, there's still a lot of risks. and just to backtrack it, we know that monetary policy works with a lag, and so it makes more sense to ensure that we're on solid footing before you begin to take your foot off the pedal," Kleintop added.
In absence of major economic data releases or earnings this week, investors have fixed their focus to next week, when corporate results for the first three months of 2021 will begin to trickle in.
Estimates have been revised up by a record margin over the past several weeks, as analysts took into account the expected earnings growth coming alongside increasing economic growth. Cyclical stocks like financials and energy names, which have profits closely linked to the pace of the economic recovery, have been among the biggest recent beneficiaries.
“We’re still in probably the early parts of the expansionary cyclical after recovering from that recession,” Omar Aguilar, Charles Schwab chief investment officer of passive equities and multi-asset strategies, told Yahoo Finance. “We’ve started to see cyclical trades playing a big role in the early part of the cycle. Normally what happens at this stage is you continue to see … the cyclical component will continue to drive leadership into the second part of this year into next year.”
At the same time, however, other strategists warned that much of the recovery may already be priced into U.S. equities. And as expectations rise, earnings will need to clear an even greater hurdle in order to impress Wall Street and push stock prices up further.
"As bottom-up S&P 500 Q1 and 2021 EPS estimates saw some of the biggest increases on record during the first three months of the year. The price strength exhibited in U.S. equities left the S&P 500 just 3.1% off our 2021 year-end price target with risk to our target now slanted to the upside," Brian Belski, BMO Capital Markets chief investment strategist, wrote in a note. The firm maintained its 2021 price target of 4,200 on the S&P 500.
"We believe investors should be prepared for a second half of the year that will likely be weaker in terms of price gains compared to 1H as the reopening and cyclicals trade matures and investors start to digest the implications of an EPS-driven environment," Belski added.
4:04 p.m. ET: Stocks boosted by tech resurgence, steady yields; S&P 500 reaches record as Dow flirts with new high
Here were the main moves in markets as of 4:04 p.m. ET:
S&P 500 (^GSPC): +17.20 (+0.42%) to 4,097.15
Dow (^DJI): +56.13 (+0.17%) to 33,502.39
Nasdaq (^IXIC): +140.47 (+1.03%) to 13,829.31
Crude (CL=F): -$0.02 (-0.03%) to $59.75 a barrel
Gold (GC=F): +$14.60 (+0.84%) to $1,756.20 per ounce
10-year Treasury (^TNX): -2.1 bps to yield 1.6320%
3:10 p.m. ET: Impossible Foods gears up for listing: Report
According to Reuters, the company that helped popularize fake meat is mulling a stock market offering that will value the plant-based burger maker at a whopping $10 billion. The alternative food trend has been one of the most explosive of the COVID-19 era, with Impossible and Beyond Meat (BYND) reaping the benefits of surging demand and a growing emphasis on health-conscious eats.
12:45 p.m. ET: Powell cites 'unevenness' in U.S. economic recovery, notes pace of global vaccinations remains a risk to outlook
Fed Chair Jerome Powell, speaking at a virtual International Monetary Fund conference Thursday afternoon, highlighted the choppy recovery in the U.S. labor market as a signal of the distance still left for the economy to make up before the Fed's goals for full employment have been met. He added that the Fed is also considering the pace of global vaccinations as a potential risk to the outlook, with vaccinations internationally generally taking place at a lower rate than they are in the U.S.
"The recovery though here remains uneven and incomplete. Tee burden is still falling on lower income workers. The unemployment rate in the bottom quartile is still 20%. There's still eight and a half million people out of work," Powell said. "This unevenness that we're talking about is a very serious issue."
"What we've said about our asset purchases is that they would continue at the current pace until we see substantial further progress toward our goals, and that will be actual progress – we're not looking at forecasts for this purpose." I would look at global vaccinations as a risk really, something to weigh in as a risk to the progress that we are making. So it's something that we track very carefully of course."
11:16 a.m. ET: Sen. Sherrod Brown calls on banks to give more answers about Archegos implosion
U.S. Senator Sherrod Brown (D-Ohio), the Chair of the Senate Committee on Banking, wrote letters to banking leaders at Credit Suisse, Nomura and Goldman Sachs pressing the institutions on their ties to Archegos Capital, which defaulted on significant margin calls several weeks ago. In doing so, the situation stirred up volatility in stocks including Viacom as banks unwound their positions, and left banks including Credit Suisse to take significant losses.
"I am troubled, but not surprised, by the news reports that Archegos entered into risky derivatives transactions facilitated by major investment banks, resulting in panicked selling of stocks worth tens of billions of dollars and those banks collectively losing nearly $10 billion," Brown said in the letter sent to the banks. "Similar failures in the past, including Long-Term Capital Management and Amaranth Advisors, demonstrate the hazards to market stability and investor confidence when excessive leverage is combined with careless risk taking."
Brown is seeking responses to a host of questions over the banks' involvement with Archegos by April 22, according to the letter.
9:30 a.m. ET: Stocks open mixed, S&P 500 hits record high
Here's where markets were trading shortly after the opening bell Thursday morning:
S&P 500 (^GSPC): +10.88 points (+0.27%) to 4,090.83
Dow (^DJI): -16.25 points (-0.05%) to 33,430.01
Nasdaq (^IXIC): +111.45 points (+0.83%) to 13,804.3
Crude (CL=F): -$0.45 (-0.75%) to $59.32 a barrel
Gold (GC=F): +$10.30 (+0.59%) to $1,751.90 per ounce
10-year Treasury (^TNX): -0.1 bps to yield 1.644%
8:30 a.m. ET: Jobless claims unexpectedly rose to a three-week high last week
New weekly jobless claims unexpectedly jumped last week to reach the highest level in three weeks, despite other signs of strengthening labor market trends across the recovering economy.
New jobless claims totaled 744,000 for the week ended April 3, the Labor Department said. Consensus economists were looking for claims to fall to 680,000, from the upwardly revised 728,000 from the prior week. Continuing jobless claims were also higher than expected at 3.734 million versus the 3.638 million expected, though last week's continuing claims were downwardly revised to 3.75 million.
7:06 a.m. ET Thursday: Stock futures trade mixed, Nasdaq futures gain 0.9%
Here's where markets were moving as of 7:06 a.m. ET Thursday morning;
S&P 500 futures (ES=F): 4,082.75, up 12.75 points or 0.31%
Dow futures (YM=F): 33,311.00, down 17 points or 0.05%
Nasdaq futures (NQ=F): 13,729.5, up 124.75 points or 0.92%
Crude (CL=F): -$0.41 (-0.69%) to $59.36 a barrel
Gold (GC=F): +$5.00 (+0.29%) to $1,746.60 per ounce
10-year Treasury (^TNX): -0.7 bps to yield 1.647%
6:00 p.m. ET Wednesday: Stock futures edge up
Here's where markets were trading Wednesday evening:
S&P 500 futures (ES=F): 4,074.75, up 4.75 points or 0.12%
Dow futures (YM=F): 33,344.00, up 16 points or 0.05%
Nasdaq futures (NQ=F): 13,627.00, up 22.25 points or 0.16%
Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter: @emily_mcck
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