US Stocks Close Higher Wednesday 02/24 16:17
Stocks shook off a weak start and closed broadly higher Wednesday, nudging
the Dow Jones Industrial Average to another all-time high.
(AP) -- Stocks shook off a weak start and closed broadly higher Wednesday,
nudging the Dow Jones Industrial Average to another all-time high.
The S&P 500 rose 1.1% after having been down 0.6% in the early going. Gains
in financial, technology and industrial stocks powered the comeback. Utilities
U.S. Treasury yields continued to head higher. Bank stocks benefited from
the latest upward move in yields, which will allow them to charge higher rates
on mortgages and other loans, increasing their profits. JPMorgan Chase rose
1.8% and Bank of America added 2.4%.
The S&P 500's technology sector accounted for a big share of the rally after
declining for six straight days.
"(Stocks) are back in rally mode after spending the past few days trending
sideways, digesting early year gains," said Terry Sandven, chief equity
strategist at U.S. Bank Wealth Management. "On balance, we still think the
glass is half full and (stocks) trend higher as we look to the end of the year."
The S&P 500 index rose 44.06 points to 3,925.43. The Dow climbed 424.51
points, or 1.4% to 31,961.86, an all-time high. The Nasdaq Composite added
132.77 points, or 1%, to 13,597.97.
The Russell 2000, which tracks smaller companies, continued to outpace the
rest of the market, as it has since the beginning of the year. That's a sign
investors are feeling more confident about economic growth. The index rose
53.07 points, or 2.4%, to 2,284.38.
Investors are still anticipating another round of stimulus to help boost the
economy. The U.S. House of Representatives is likely to vote on President
Biden's proposed stimulus package by the end of the week. It would include
$1,400 checks to most Americans.
The afternoon rebound followed Federal Reserve Chair Jerome Powell's
appearance before Congress Wednesday. Powell said that the central bank will
not begin raising interest rates until it believes it has reached its goals on
maximum employment and inflation.
As he did before the Senate Banking Committee on Tuesday, Powell told the
House Financial Services Committee that the Fed was in no hurry to raise
benchmark short-term interest rates or to begin trimming its $120 billion in
monthly bond purchases used to put downward pressure on longer-term rates.
Powell said the Fed did not see any indication that inflation could race out
of control. While price increases might accelerate in coming months, Powell
said those increases were expected to be temporary and not a sign of long-run
inflation threats. Inflation has been nonexistent in the U.S. for the better
part of a decade.
Treasury yields continued to climb Wednesday, adding to a multi-week
increase in rates that are used as benchmarks for many kinds of loans. The
yield on the 10-year Treasury note rose to 1.38%, the highest level in just
over a year.
The rise in bond yields has several implications for both the stock market
and overall economy. Higher yields make stocks with lofty valuations less
attractive. Those tend to be technology companies, which are priced typically
for growth and not for a steady return of dividends like mature companies like
makers of consumer staples, utilities and real estate.
Despite the tech in rally stocks overall, some Big Tech companies fell
Wednesday. Apple slid 0.4% and Amazon dropped 1.1%. Those and other Big Tech
companies rocketed in 2020 as investors bet that the pandemic would cause
Americans to shift shopping habits and buy gadgets to keep themselves occupied
in pandemic quarantines.
Boeing jumped 8.1%, the biggest gainer in the Dow Jones Industrial Average,
after shedding 2.5% over the prior two days in the wake of an engine
malfunction over the weekend in a 777 aircraft operated by United Airlines.
The plane, which took off from Denver and was bound for Honolulu, was forced
to make an emergency landing Saturday after a fan blade broke and pieces of the
engine's casing fell on neighborhoods. Federal aviation regulators ordered the
grounding of planes with the type of engine on the plane.
GameStop doubled in the last hour of trading in another burst of volatility.
The video game retailer's stock shot up to $91.71. It was the stock's best day
since January 27, when it more than doubled and closed at $347.51. Shares in
AMC Entertainment jumped 18.1%. Both stocks have been hyped in recent weeks by
people on social media forums at the expense of hedge funds that were betting
these stocks would lose value.