S&P 500, Nasdaq hit record highs as taper fears calm
(Reuters) – The S&P 500 and Nasdaq hit record highs on Monday as dovish remarks from Federal Reserve chief last week bolstered optimism in an economic rebound and eased fears of a sudden tapering in monetary stimulus.
Apple Inc, Microsoft Corp, Amazon.com, Google-owner Alphabet Inc and Nvidia rose between 0.6% and 1.3%, helping the tech-heavy Nasdaq outperform the S&P 500 and the Dow.
High-growth tech stocks tend to benefit from expectations of lower rates because their value rests heavily on future earnings.
The benchmark S&P 500 is tracking its longest monthly winning streak since 2018 on the promise of easy money, with investors shrugging off signs of a slowing economic recovery and surging COVID-19 cases.
Fed Chair Jerome Powell said on Friday the central bank would continue to be cautious in its approach to tapering its massive pandemic-era stimulus, while reaffirming a steady economic recovery.
“Investors feel that a low interest-rate regime is a go-signal to remain invested in equities and are more interested in being a part of this dramatic rise rather than be in fear of the market falling,” said Rick Meckler, partner at Cherry Lane Investments in New Vernon, New Jersey.
The S&P 500 has risen 2.6% so far in August – a seasonally weak period for stocks – and Wells Fargo analysts said last week they expect the index to rise another 8% by the end of the year.
The benchmark index is also on track to log one of its best year-to-date returns through August of the past six decades, said Chris Larkin, managing director, Trading at E*TRADE Financial.
At 10:16 a.m. ET, the S&P 500 was up 0.31% and the Nasdaq Composite was up 0.63%.
The Dow Jones Industrial Average, on the other hand, was down 0.16% as economically sensitive energy stocks slipped 0.8%. [O/R]
Falling bond yields also pressured bank stocks, with the S&P 500 banking index down 1.8%.
U.S.-listed shares of Chinese gaming firm NetEase Inc slumped 6.4% as Chinese regulators slashed the amount of time players under the age of 18 can spend on online games to an hour on Fridays, weekends and holidays.
Shares of satellite transporter startup Astra Space Inc plummeted 18.8% after the test launch of its rocket LV0006 ended prematurely about two-and-a-half minutes after liftoff.
Moderna dropped 2.2% as Japan temporarily suspended another one million doses of the drugmaker’s COVID-19 vaccine.
All eyes this week will be on the Labor Department’s monthly jobs report, which could set the stage for the Fed’s Sept. 21-22 policy meeting.
Declining issues outnumbered advancers 1.29-to-1 on the NYSE and 1.21-to-1 on the Nasdaq.
The S&P index recorded 49 new 52-week highs and no new low, while the Nasdaq recorded 106 new highs and 17 new lows.
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