If you're a fan of big, round numbers, you probably enjoyed Thursday's market activity, which saw the major stock indexes flirt with a pair of them amidst a wide, robust rally.
Fueling today's fire? For one, the lowest reading for initial unemployment claims so far in the COVID recovery: 576,000 for the week ended April 10, a sharp decline of 193,000 from the week before.
"The drop in initial claims hints that job separation rates are starting to normalize as the economy picks up steam, after having remained elevated throughout the recovery," says Jonathan Millar, deputy chief U.S. economist at Barclays Investment Bank. "Sustained progress on this front would be a very positive development for the labor market recovery, which has lagged well behind the recovery in activity."
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Also inspiring optimism was a massive 9.8% month-over-month leap in March retail sales that easily cleared consensus views for a 5.8% improvement.
"There is plenty of pent-up demand in the economy, as Thursday's retail sales report showed," says Vanessa Martinez, managing director and partner for wealth management firm The Lerner Group. "Consumer savings rates have surged over the past year, and we expect consumer spending to remain elevated for the remainder of 2021, which should bode very well for 2021 GDP figures."
Earnings reports added to the exuberance, too. UnitedHealth Group (UNH, +3.8%) reported a nearly 43% year-over-year pop in profits to $5.31 per share that easily hurdled analysts' expectations. That helped spark a strong day in the healthcare sector (+1.7%), and pushed the Dow Jones Industrial Average past the 34,000 mark, an 0.9% gain to a record 34,035.
Semiconductor stocks such as Nvidia (NVDA, +5.6%) and Advanced Micro Devices (AMD, +5.7%) powered the Nasdaq Composite (+1.3% to 14,038) through the 14,000 level. And the S&P 500 climbed 1.1% to a record close of 4,170.
Other action in the stock market today:
- The Russell 2000 rose 0.4% to close at 2,257.
- U.S. crude oil futures improved by 0.5% to $63.46 per barrel.
- Gold futures punched 1.8% higher to $1,766.80 per ounce.
- The CBOE Volatility Index (VIX) declined 2.9% to settle at 16.50.
- Bitcoin prices rebounded 2.4% to $63,489. (Bitcoin trades 24 hours a day; prices reported here are as of 4 p.m. each trading day.)
Dow 34K: Just the Beginning?
Thursday had a celebratory feel to it, but investors shouldn't blow through all of their confetti. Several analysts who weighed in on the Dow's ascent to 34K believe there's more to come.
"The Dow's push through 34,000 is a signal that investor appetite for future growth prospects is spilling over into more value-oriented names," says Peter Essele, head of portfolio management for Commonwealth Financial Network. "The demand for industrials and more cyclically oriented areas should continue as the vaccines take hold and earnings potentially come in higher than originally expected."
Chris Zaccarelli, chief investment officer for Independent Advisor Alliance, adds that "a re-opening economy, with better weather and decreasing consumer caution, will drive markets higher this year, with double-digit returns possible in 2021."
Those are certainly encouraging remarks for holders of any of the Dow's 30 stocks, not to mention the numerous other stocks counting on the recovery to continue reversing their fortunes.
They also bode well for many of the cyclical names found among the potential beneficiaries of President Joe Biden's recently unveiled "American Jobs Plan." Generally speaking, a brisk economic expansion would light a fire under many of these stocks – and they could really heat up if Biden's plan manages to gain traction in the months ahead. Check out these 15 infrastructure plays that could get a boost from the American Jobs Plan.
Kyle Woodley was long NVDA as of this writing.
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