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Stock Market News for Apr 9, 2021

Wall Street closed higher on Thursday supported by technology stock's rally. Moreover, Fed Chairman Jerome Powell's comment on inflation also boosted market participants' confidence. All the three major stock indexes ended in green.

How Did The Benchmarks Perform?

The Dow Jones Industrial Average (DJI) was up 0.2% to close at 33,503.57. Notably, 15 components of the 30-stock blue-chip index ended in the green while 15 in red. The tech-heavy Nasdaq Composite finished at 13,829.31, gaining 1% or 140.47 points due to strong performance by large-cap technology stocks.

Meanwhile, the S&P 500 rose 0.4% to end at 4,097.17, marking a fresh closing high. In intraday trading, the broad-market index touched a fresh all-time high at 4,098.19. The Technology Select Sector SPDR (XLK) surged 1.4% while the Energy Select Sector SPDR (XLE) tanked 1.3%. Notably, eight out of eleven sectors of the benchmark index closed in the green while three in red.

The fear-gauge CBOE Volatility Index (VIX) was down 1.2% to 16.95. A total of 9.23 billion shares were traded on Thursday, lower than the last 20-session average of 11.93 billion. Advancers outnumbered decliners on the NYSE by a 1.80-to-1 ratio. On Nasdaq, a 2.13-to-1 ratio favored advancing issues.

Technology Stocks Gain

Impressive rally of U.S. stocks prompted investors to reallocate funds from safe-haven government bonds to risky assets like equities. As the demand for bond declined, bond prices dropped and yields soared. Notably, the yield on  the benchmark 10-Year U.S. treasury Note jumped from 0.9% at the end of 2020 to 1.776% in late March, its 14-month high.

High risk-free return is detrimental to high growth industries like technology. Most of the growth companies depend on easy borrowing at cheap rates. Higher market interest rate will raise their cost of projects. As a result, market participants have started to reallocate their funds to cyclical stocks from growth stocks.

However, the yield of 10-Year U.S. Treasury Note declined gradually to close at 1.624$% on Apr 8, despite bull run in stock markets. Consequently, technology stocks once again regained investors' preference.

Technology behemoths like Apple Inc. AAPL, Netflix Inc. NFLX and Microsoft Corp. MSFT were up 1.9%, 1.4% and 1.3%, respectively. Microsoft carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Powell's Comment on Inflation

At  a webinar on the global economic outlook hosted by the International Monetary Fund, Fed Chairman Jerome Powell said that a rise in inflation this year in the United States will be transitory in nature. Market participants were concerned about higher inflation in the near term due to strong pent-up demand that may force the Fed to raise benchmark interest rate. Notably, the core PCE price index - Fed's favorite gauge for inflation - came in at 1.5% in February, well below the central bank's target rate of 2%.

Economic Data

The Department of Labor reported that weekly jobless claims rose 16,000 to 744,000 for the week ended Apr 3, higher than the consensus estimate of 681,000. Previous week's data was revised upward to 728,000 from 719,000 reported earlier.

Continuing claims (for those who already received benefits and reported from a week in arrears of Initial Claims data) have declined, falling 16,000 to 3.79 million, reflecting the lowest level since Mar. 21, 2020. Moreover, the four-week moving average for new claims moved higher to 723,750.

Stocks That Have Made Headline

CommScope to Separate Home Networks Arm, Shares Rally

CommScope Holding Co. Inc. COMM recently announced that it intends to separate its Home Networks business to create an independent publicly traded entity. (Read More)

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