U.S. stocks ended higher on Thursday as technology-related shares extended their recent strong run, while regional bank shares fell after the Biden administration proposed stronger measures to help reduce risk. The Canadian stock market also rose in a broad-based advance, closing at its highest level in three weeks, as easing stress in the global banking sector bolstered investor sentiment heading into the end of the first quarter of the year.
The S&P 500 technology index was up 1.1% and gave the S&P 500 its biggest boost, while the Philadelphia semiconductor index hit its highest level in nearly a year. Wednesday’s strong gains grew on optimism that a downturn in chip sales has ended.
U.S. regional bank shares fell as the Biden administration called for stricter rules that would strengthen mid-sized banks without having to go to Congress.
The KBW regional bank index ended down 2%, and the S&P 500 financial index fell 0.3%, the only S&P 500 sector in negative territory on the day.
“Tech is probably the furthest sector removed from financials,” so there has been a rotation away from financials, said Jack Ablin, chief investment officer at Cresset Capital in Chicago.
The banking turmoil, which started earlier this month with the collapse of two regional U.S. lenders, had sparked concerns about a broader financial crisis.
With one day to go in the first quarter, the technology sector was up about 20% for the period, leading sector gains along with communication services, which is up about 18%. Nasdaq is on track for its biggest percentage quarterly gain since the end of 2020.
Investors also awaited the February reading of personal consumption expenditures (PCE) price index due Friday after January figures showed a sharp acceleration in consumer spending.
Three Federal Reserve officials kept the door open on Thursday to more rate rises aimed at lowering inflation, with two noting banking sector problems could generate enough headwinds on the economy.
Fed funds futures traders are now pricing in a 55% chance of a 25-basis-point rate increase at the Fed’s May 2-3 meeting.
Data earlier on Thursday showed jobless claims last week rose more than expected from the week before, indicating a cooling labor market.
Separately, fourth-quarter GDP growth was slightly lower at 2.6% compared with earlier estimates of 2.7%, both supporting the case for a softer Fed policy.
In another report, the Commerce Department confirmed the U.S. economy grew at a solid clip in the fourth quarter, but much of the increase in output came from inventory accumulation.
The Toronto Stock Exchange’s S&P/TSX composite index ended up 103.34 points, or 0.5%, at 19,940.99, its highest closing level since March 9.
It was the fifth straight day of gains for the index, its longest winning run since January. Since the start of the year, the index has advanced 2.9%.
“Things are feeling a lot better than they did a few weeks ago, so people are allocating back to equities heading into quarter end,” said Greg Taylor, chief investment officer at Purpose Investments.
“Commodities are doing a little better here, so we are seeing a little bit of strength in some of those related stocks.”
The energy sector rose 0.4% as oil settled 1.9% higher at $74.37 a barrel, while the materials group, which includes precious and base metals miners and fertilizer companies, added 0.5%.
It was helped by a gain of 6.6% for the shares of Filo Mining Corp after CIBC started coverage of the miner with an “outperform” rating and a target price of C$38.
Of the 10 major sectors, only healthcare lost ground. Technology rose 0.7% and consumer staples was up 1.1%.
The Dow Jones Industrial Average rose 141.43 points, or 0.43%, to 32,859.03, the S&P 500 gained 23.02 points, or 0.57%, to 4,050.83 and the Nasdaq Composite added 87.24 points, or 0.73%, to 12,013.47.
U.S.-listed shares of Alibaba Group Holding climbed 3.5% on a report that its logistics arm had started preparations with banks for its Hong Kong initial public offering, while those of JD.Com jumped 7.8% on plans to spin off its real estate infrastructure arm.
Faraday Future Intelligent Electric Inc rose after the company said it had started production of its first luxury electric car after a months-long delay, but the stock ended the day down slightly.
Advancing issues outnumbered decliners on the NYSE by a 2.70-to-1 ratio; on Nasdaq, a 1.18-to-1 ratio favored advancers. The S&P 500 posted eight new 52-week highs and no new lows; the Nasdaq Composite recorded 63 new highs and 151 new lows. Volume on U.S. exchanges was 10.36 billion shares, compared with the 12.68 billion average for the full session over the last 20 trading days.
Reuters, Globe staff
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