S&P500 Closes Above 4K Fueled by Investors’ Optimism For 2nd Quarter

02 Apr 2021 · 3rd Party Analysis

US Equity Futures Tick Up, Dogecoin Hits Another Record


In Summary

  • S&P kicks off the second quarter with 1.18% gains
  • Market remains optimistic the economy will rebound sooner than planned

The broad-based S&P500 index closed above 4,000 points for the first time in history on the first day of the second quarter of 2021. The increased risk appetite for technology shares prompted the broad stock gauge to hit 4,019.87, closing the day higher by 1.18%, or 46.98 points.

The strong buying momentum on Thursday followed a fourth consecutive quarterly advance for the S&P500 as investors felt optimistic to bet heavily on the back of fresh stimulus from the government and a $120bn monetary aid per month by the Federal Reserve. In the short-term, the S&P500 logged its second straight month of gains as the market participants are already positioning their portfolio for a swift economic recovery.

Yesterday was a strong day for the other benchmarks, too. The Nasdaq Composite received a 1.76% boost, or 233.23 points, to end the session at 13,480.11. The tech-focused index was buoyed by a continued rebound in high growth tech stocks. Google-parent Alphabet and Netflix shot up more than 3% on the day apiece, while Amazon and Microsoft were up over 2% each. The Dow Jones Industrial Average also received a fair amount of attention, given the rebound in tech. The blue-chip index was lifted 0.52%, or 171.66, to close at 33,153.21.

Crossing the milestone for the S&P500 was underpinned by the rollout of President Joe Biden’s infrastructure plan. Moreover, investors’ pressure over rising borrowing costs was eased as bond yields continued to retreat from recent highs, helping the tech sector to lead the daily gains. The 10-year Treasury yield fell 7 basis points to 1.679%, while the yield on the 30-year note fell to 2.342%.

A handful of economic data on Thursday, including first-time filings for unemployment benefits, indicated that the expected bounceback of the economy remains on track. Workers filed 719,000 initial jobless claims, higher than the previous one of 658,000 for the week prior, but still near the lows amid the pandemic. Тhe four-week moving average in initial jobless claims continues to drop, currently at 719,000, the lowest since the pandemic began. However, the numbers are still far off from the 2019 weekly average of 218,000.

A Positive Outlook for the Second Quarter

The economy still has a long way to go in order to reach the Fed’s goal of “maximum employment”. The week ended Mar 13 reported over 18 million continuing jobless claims, including pandemic-related unemployment programs. Compared to a year ago, there were over 9.5 million fewer jobs in the US economy for the month of February, after the latest non-farm payrolls report showed 379,000 jobs were added to the labor market.

The key non-farm payrolls report for March will arrive later today. It will indicate the strength and speed of the economic recovery. The numbers are expected to include jobs created as a result of Joe Biden’s $1.9tn stimulus package that was approved in early March and soon after started going out to business and individuals.

Stocks will take a breath today as the equity market is closed in observance of Good Friday. The major stock markets, including the New York Stock Exchange (NYSE) and Nasdaq, will be closed.

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