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Wall Street ticks higher, led by tech and smaller stocks

The S&P 500 was up 0.8 per cent
Last Updated 31 March 2021, 20:31 IST

US stocks are rising in afternoon trading Wednesday, as investors wait to hear the details about Washington's next mammoth push for the economy.

The S&P 500 was up 0.8 per cent, ahead of a speech later in the day where President Joe Biden is expected to discuss his plan to spend $2 trillion on strengthening the nation's infrastructure, and how to pay for it. If the gain holds, it would be the first for the index since it set a record high at the end of last week.

The Dow Jones Industrial Average rose 23 points, or 0.1per cent, to 33,090 as of 12:25 p.m. Eastern time, and the Nasdaq composite was 1.9per cent higher.

Stocks of smaller companies were once again leading the way, as they have since last autumn on rising expectations for the economy. The Russell 2000 index climbed 1per cent.

It's up 12.3 per cent for 2021 so far, nearly double the gain of the big stocks in the S&P 500.

Tech stocks and companies expected to deliver big growth in the future were helping to lead the way for the market.

Apple climbed 2.9per cent, and Tesla rose 3.8 per cent. It's a reprieve for the group, which led the market earlier in the pandemic but has since lost momentum amid a sharp rise in Treasury yields.

The 10-year Treasury yield held steady at 1.72 per cent, though it remains close to its highest level since before the pandemic rocked markets a year ago.

COVID-19 vaccinations and massive spending plans by Washington have raised expectations for supercharged economic growth and a possible rise in inflation, which has pushed yields higher.

In his speech in Pittsburgh later in the day, Biden is expected to give details about where he wants to steer federal dollars to rebuild roads, bridges and the electric grid.

Such programs could mean gushers of revenue for everything from raw-material producers to electric-vehicle makers.

To help pay for it, though, businesses may be looking at higher corporate tax rates, which would pressure their profits.

Some investors also worry that all the spending and borrowing by the U.S. government could eventually lead to even higher interest rates for the economy.

Investors will be closely watching for details on the infrastructure plan to get a better sense of future priorities, said Rob Haworth, senior investment strategy director at U.S. Bank Wealth Management. Friday's government jobs report is also highly anticipated.

“The question for the market is, what's next?” said Rob Haworth, senior investment strategy director at U.S. Bank Wealth Management. “March in particular has been a bit of a pause for the market to recalibrate.”

The market's movements could be volatile through the day as investors close their books on the first quarter of the year.

The S&P 500 is on pace for a nearly 6per cent rise for the first three months of 2021, which would be its fourth straight quarter of gains following its lightning-quick plunge in early 2020 amid pandemic panic.

Within the index, the leaderboard of performance is virtually the mirror image of earlier in the pandemic. Energy producers, financial businesses and industrial companies are now leading the way, all climbing between 10per cent and 30per cent this quarter.

They've shot higher, along with smaller stocks, on expectations that a return to normalcy for the economy and Washington's huge spending will mean big jumps in profit later this year.

It's a turnaround from earlier in the pandemic, when they plunged on uncertainty about when airplanes may be full again and burning jet fuel.

Stocks of companies that had been winners in the stay-at-home economy or that had been bid up on expectations for strong growth many years into the future, meanwhile, have lagged. Apple is down 7per cent for the quarter so far, for example, while American Airlines Group is up more than 50per cent.

Shares of app-based meal delivery service Deliveroo, which saw its business boosted by pandemic lockdowns, tumbled by as much as a third in their U.K. stock market debut on Wednesday.

In European stock markets, the German DAX was unchanged, while the French CAC 40 fell 0.3per cent. The FTSE 100 in London dropped 0.9per cent.

In Asia, Japan's Nikkei 225 fell 0.9per cent, South Korea's Kospi dipped 0.3per cent and Hong Kong's Hang Seng lost 0.7per cent. Stocks in Shanghai dropped 0.4per cent.

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(Published 31 March 2021, 20:31 IST)

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