US Stocks Post a Week of Gains, S&P and Dow Set New Records

12 Apr 2021 · 3rd Party Analysis

WRITTEN BY ThorFX

In Summary

  • US stocks accelerate weekly gains on Friday, S&P500, Dow notch records
  • Jerome Powell delivers an upbeat message on the economic outlook

US equities ended last week with solid gains as they advanced strongly on Friday. The rally on the last day of the week for the S&P500 and the Dow Jones Industrial Average was enough to produce new records for the two benchmark stock gauges. Major indexes gravitated towards unchanged levels for most of Friday but later in the trading session, increased buying momentum shot them higher.

The S&P500 rose 31.63 points, or 0.77%, to finish the session at a record high of 4,128.80. The 30-stock Dow Jones Industrial Average index gained 297.03 points, or 0.89%, to close at 33,800.60. Both indexes ended the week in green territory, while the S&P500 extended its winning streak to three weeks for the first time since October. The Nasdaq Composite also climbed higher to close the week in the green and now sits less than 1% from its all-time peak. The tech-heavy index gained 70.88 points, or 0.51%, closing at 13,900.19.

Technology shares were among the preferred stocks for investors this week. On the back of a relaxed bond market, yields dropped throughout most of the week before climbing slightly on Friday. While investors carried their optimism through the week that the economy will reopen, individual tech stocks were among the biggest winners. Twitter shares advanced 12% last week, Apple gained 8.1%, Amazon added 6.2% and Microsoft popped 5.3%.

Growth and Positivity on the Horizon?

Still, the rally was broad-based propelled by reopening trades as investors feel confident that economic growth will pick up swiftly aided by government spending and vaccination campaigns across the country. Adding to the mix of positivity, last week’s job report indicated the unemployment rate reached a pandemic low. The IMF published its encouraging report on the economic outlook, projecting the world economy will grow by as much as 6% this year with the US in the lead, driving the world out of the pandemic.

Meanwhile, on Sunday, Federal Reserve Chairman Jerome Powell said the US economy was at an “inflection point” as the virus remains a risk. In an interview on CBS’s 60 Minutes program, Fed Chair Powell delivered positive remarks on the economy, saying he expected growth and hiring to continue climbing, but he also warned that new spikes in Covid-19 infections could offset the recovery.

“We feel like we’re at a place where the economy’s about to start growing much more quickly and job creation coming in much more quickly,” said Mr. Powell in the interview. “What we’re seeing now is an economy that seems to be at an inflection point, and that’s because of widespread vaccination and strong fiscal support, strong monetary policy support,” he added.

The Federal Reserve has reiterated multiple times it will continue to provide the needed monetary support to the economy for as long as it takes, at least until the economy returns to full employment. While Jerome Powell delivered an upbeat message on the economic outlook, he also underlined “there are real risks out there.” “The principal risk to our economy right now is that the disease would spread again,” Mr. Powell said.

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