Dow Jumps 300 Points to New High, Tech Stocks Stage Late Rally

07 May 2021 · 3rd Party Analysis

Dow Soars Above 34,000 Powered by Strong Economic Data


In Summary

  • US equities spike higher amid positive US economic data
  • Recovery continues to be fueled by government stimulus and vaccine rollout

The Nasdaq Composite snapped its losing streak on Thursday in a late-hour rally led by the same companies that pulled back earlier in the week. The turnaround for the tech-heavy index resulted in a gain of 0.37%, or 50.42 points, to 13,632.84. Earlier in the session, the Nasdaq Composite was trading lower by more than half a percent.

The Dow Jones Industrial Average continued its upside swing and rallied another 0.93% on the day, or 318.19 points, to finish at a new all-time high of 34,548.53. The S&P500 climbed 0.82%, or 34.03 points, to end the session at 4,201.62.

All three major benchmark indexes were lifted on signs of increasingly improving the economy and labor market. Upbeat corporate earnings also added to the buying momentum on Thursday. The late-session rally was inspired by investors piling into every sector from consumer staples through banks to technology mainstays.

Apple, Facebook, and Microsoft all pushed higher by over 1.20% each, while Google-parent Alphabet and Amazon climbed 1% apiece. The S&P500 finished the trading day less than 1% from a record after gyrating around the flat line throughout the day. Strong earnings reports also provided a boost to the S&P500 after companies such as Kellog and PayPal released better-than-expected revenue for the first quarter. Shares of Kellog advanced 7.1%, or $4.46, to $67.52, driving higher the consumer staples sector in the S&P500. PayPal shares jumped 1.9%, or $4.62, to $252.02 after the company lifted its revenue expectations for the year.

Efficient Vaccination Rollouts Leading to Easing of Restrictions

The move to the upside followed positive data from the US Labor Department. Jobless claims, a proxy for layoffs, reached their lowest level since the pandemic began. The initial claims fell 92,000 to 498,000, another strong sign that the jobs market is staging a swift rebound. The result dragged the four-week average figure to 560,000, a decrease of 61,000 from the previous week’s revised average. The number, however, is still well below pre-pandemic levels. On March 14, 2020, the four-week average of initial jobless claims hovered at 255,500.

Fueling recovery hopes and optimism for a brighter near-term future, the US vaccination program remains on track to meet President Biden’s new goal – 70% of all American adults to have at least one shot of the vaccine. Currently, more than 57% of all US citizens over 18 years of age have received the first dose of a Covid-19 vaccine, while 45% of all Americans have had their first jab. The rollout of the vaccination campaign across the states now stands at an average of 2.1 million doses administered per day. Against the backdrop of increasing vaccinations, more and more US states are gradually reopening and easing business and social restrictions. At the same time, government stimulus is providing enough liquidity to keep the economy moving higher, and to create new jobs that will sustain the recovery.

Later today, investors will monitor April’s jobs and unemployment report to see if the economy continues to accelerate toward recovering the jobs lost during the pandemic. For March, the US added 916,000 new jobs to the economy.

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