The S&P 500 closed higher on Wednesday, boosted by gains in technology shares, and the three major Wall Street indexes registered their fourth straight quarterly rise.
Investors awaited details of President Joe Biden’s massive infrastructure plan. The $3 trillion-$4 trillion package will target traditional projects like roads and bridges alongside investments in the electric vehicle market.
The S&P 500 benchmark index came close to hitting 4,000 for the first time as bets on a strong economic rebound helped the market ride out a quarter that included a retail trading frenzy, inflation worries, a spike in Treasury yields and a U.S. hedge fund going bust.
In Toronto, the heavyweight energy and financial sectors weighed on the TSX/S&P composite index, which closed down 4.89 points, or 0.03%, at 18,700.67.
The index rose 3.6% in March and 7.3% for the first quarter of 2021.
Energy stocks slid 0.8% as oil prices were down on Wednesday on concerns about the market’s recovery after OPEC and its allies lowered their 2021 demand growth forecast, but a draw in U.S. crude inventories limited the fall.
Brent crude for May, which expires on Wednesday, shed 41 cents, or 0.6%, to $63.73 a barrel The more active Brent contract for June was down $1.10, or 1.75%, at $63.07 a barrel.
U.S. West Texas Intermediate (WTI) crude futures lost 47 cents, or 0.8%, to $60.08 a barrel.
Bank stocks led financials down 1%. Laurentian Bank of Canada led decliners, finished down 2.8%, while Bank of Nova Scotia, Royal Bank of Canada and Bank of Montreal slid just over 1%.
In New York, the S&P 500 technology index led sector gains, while energy lagged.
“The trend we’re seeing today is investors rotating back into growth-oriented names that have gotten a little bit beaten up over the past few weeks or so due to underlying rotation toward the economic reopening stocks,” said Michael Sheldon, chief investment officer at RDM Financial Group at Hightower.
Some cyclical sectors could also be taking a breather from their rise because of recent strength in the dollar, he said.
“That’s probably had some impact on commodity prices, industrial stocks and possibly financials as well.”
For the quarter, the Nasdaq underperformed the other two major indexes as investors swapped growth-oriented stocks with underpriced shares deemed to benefit most from a full economic reopening. High-flying tech names have been hit by a surge in U.S. 10-year bond yields.
Unofficially, the Dow Jones Industrial Average fell 6.09 points, or 0.02%, to 33,060.87, the S&P 500 gained 22.58 points, or 0.57%, to 3,981.13 and the Nasdaq Composite added 220.46 points, or 1.69%, to 13,265.85.
The size and scale of Biden’s proposal, as well as the question of how it would be paid for is likely to set the stage for the next partisan clash in Congress.
Apple Inc rose after brokerage UBS upgraded the stock to “buy” on stable long-term demand for iPhones with better authorized service providers.
Walgreens Boots Alliance advanced after raising its 2021 profit forecast on higher sales at its U.S. retail pharmacy stores.
U.S. private employers boosted hiring in March as more Americans got vaccinated against COVID-19. The payroll report was in line with the recent signs of improvement in the labor market and comes ahead of a more comprehensive monthly jobs report on Friday
In Europe, shares closed slightly lower. The regional STOXX 600 index fell 0.2%, but posted its second straight month of gains and best since April 2020. Britain’s blue-chip FTSE 100 index fell 0.9% as online food delivery firm Deliveroo fell 30% on its first day of trading.
Some global banks face billions of dollars in losses after U.S. hedge fund Archegos Capital Management defaulted on margin calls, putting investors on edge about who else, especially banks, might be exposed.
But focus for much of the quarter has been on the surge in bond yields, making equity valuations look lofty, particularly for the major tech companies that bore the brunt of the recent sell-off.
On Wednesday, 10-year Treasury yields rose as high as 1.753%, after initially being pushed down on demand from traders rebalancing their portfolios for quarter-end.
Euro zone bonds calmed, but Germany’s 10-year yield was set for its biggest quarterly jump since the fourth quarter of 2019.
European Central Bank President Christine Lagarde, in a Bloomberg TV interview on Wednesday, defied investors who have been pushing up borrowing costs on the euro zone’s bond markets to test the ECB’s resolve.
Investors were looking ahead to Biden’s trip to Pittsburgh on Wednesday, where he is expected to push for a “Build Back Better” plan. Its price tag could be as high as $4 trillion to pay for conventional roads and bridges while also tackling climate change and domestic policy issues like income equality.
Talk of taxes in 2021 is premature and is creating a lot of apprehension as investors grapple with the question of how long will the economic recovery trade last, said Kristina Hooper, chief global market strategist at Invesco in New York.
“All these spending initiatives that are being talked about are all coming with price tags of higher taxes. That’s a hard pill to swallow when the economy is still very much getting its sea legs and is still very much in recovery mode,” Hooper said.
The plans have a tortuous journey in Congress and likely will look very different once all the political wrangling is done, said James Athey, investment director at Aberdeen Standard Investments.
“If investors are weighing the risks appropriately, there shouldn’t be much impact on markets in the short term,” he said.
MSCI’s benchmark for global equity markets rose 0.4% to 674.82.
MSCI’s broadest index of Asia-Pacific shares outside of Japan fell 0.4%, marking its first monthly loss in five months.
China’s blue-chip index sank 0.9% and Japan’s Nikkei slid 0.9% as investors sold financial shares amid growing uncertainty over the fallout from the margin calls that brought down Archegos Capital.
Reuters
Be smart with your money. Get the latest investing insights delivered right to your inbox three times a week, with the Globe Investor newsletter. Sign up today.