US stocks boosted as Congress passes stimulus

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  • 2021-03-11 HKT 05:23″ title=”Wall Street got a boost from data showing that inflation was not yet a worry and from the passage of a huge stimulus package. FIle photo: Shutterstock”>


    Wall Street got a boost from data showing that inflation was not yet a worry and from the passage of a huge stimulus package. FIle photo: Shutterstock
    Wall Street got a boost from data showing that inflation was not yet a worry and from the passage of a huge stimulus package. FIle photo: Shutterstock

The S&P 500 rose on Wednesday and the blue-chip Dow hit a record high after tepid consumer price data for February calmed inflation worries and Congress gave final approval to one of the largest economic stimulus measures in US history.

A rotation into sectors such as energy and financials continued, both in small- and large-cap stocks, as investors bet on consumer spending when the US economy reopens and sold the big tech names that have fueled the rally since last March.

An expected economic surge once the coronavirus vaccines are rolled out along with the monster fiscal stimulus have triggered inflation fears and a spike in Treasury yields, leading the Nasdaq to tumble as much as 12 percent from its February 12 record close.

Investors are shifting funds from tech stocks with lofty valuations to other groups, such as energy and financials, that are undervalued and more of a play on an improving economy in a post-COVID world than big tech is, said Peter Tuz, president of Chase Investment Counsel in Charlottesville, Virginia.

“It is occurring in fits and starts,” Tuz said. “That is essentially the overwhelming theme in the market right now and it probably will continue until these things run their course.”

The move away from Apple, Amazon, Facebook, Tesla and Microsoft, all down on the day, led small-cap stocks to rise more than double the gains of the S&P 500.

Also helping lift equities are rising estimates for US corporate profitability this year following surprisingly strong fourth-quarter earnings and growing optimism about the recovery.

The Dow Jones Industrial Average rose 1.5 percent to end at 32,297, while the S&P 500 gained 0.6 percent to 3,898.

The Nasdaq Composite dropped 0.04 percent to 13,068.

Shares of Roblox Corp jumped 54 percent at one point in its New York Stock Exchange trading debut, valuing the US gaming company at more than US$42 billion and making it one of the most active stocks on the NYSE.

The Nasdaq closed lower in choppy trade after logging its best one-day percentage jump in four months on Tuesday.

The sweeping US$1.9 trillion COVID-19 relief bill passed by the US House of Representatives gave President Joe Biden his first major victory in office.

Some of the US$1,400 in payments heading to most Americans could end up in the stock market and could provide a boost for GameStop and other stocks popular among retail investors active in online social media forums.

Trading in GameStop gyrated wildly after multiple NYSE trading halts as shares of the video game retailer and other so-called meme stocks approached levels last seen during their late January rally. (Reuters)