By Stan Choe, Damian J. Troise, Alex Veiga
Stocks regained their footing after an early slide and closed broadly higher Thursday, led by gains in financial and industrial companies.
The S&P 500 rose 0.5% after having been down 0.9% in the early going. The gain is the benchmark index's first in three days after a recent stretch of back-and-forth trading the last few weeks. Even so, the S&P 500 was still on track for a small weekly loss.
Banks and industrial companies powered much of the market's late-afternoon turnaround, offsetting weakness in Microsoft, Netflix, Facebook and other Big Tech stocks. Treasury yields initially eased, then edged higher following encouraging reports on weekly jobless claims and fourth-quarter U.S. economic growth.
Investors have been moving money away from expensive tech stocks as part of a broader shift to stocks tied more closely to economic growth. There’s a good chance the recovery could be surprisingly strong with little interference from the Federal Reserve, said Andrew Slimmon, portfolio manager at Morgan Stanley Investment Management.
“There is a very clear message that the Fed is going to sit back and let the economy grow at a hotter rate because their number one priority is unemployment,” he said. “That means there’s a good chance the economy overshoots.”
The S&P 500 rose 20.38 points to 3,909.52. The Dow Jones Industrial Average gained 199.42 points, or 0.6%, to 32,619.48. The index had been down more than 348 points.
The tech-heavy Nasdaq composite had been down 1.4% before clawing back 15.79 points, or 0.1%, to 12,977.68. The Russell 2000 index of smaller stocks outdid the rest of the market, climbing 48.86 points, or 2.3%, to 2,183.12.
The market has been mostly tumbling in place recently, with support for stocks coming from expectations that the economy will soar soon thanks to COVID-19 vaccinations and huge amounts of spending by Washington. A quick rise in interest rates has undercut stocks at the same time, though.
Yields in the Treasury market rose Thursday, but at a modest pace after the 10-year yield spiked above 1.70% last week, its highest level since before the pandemic started. The 10-year Treasury yield, which helps set rates for all kinds of loans, rose to 1.63%, from 1.61% late Wednesday.
The Labor Department said the number of workers filing for unemployment benefits eased to its lowest level since before the pandemic erupted a year ago. Another report said the U.S. economy grew at a faster pace at the end of 2020 than earlier estimated.
Moves in Treasury yields have been a major reason for the swings in the stock market in recent weeks. When bonds pay more in interest, they make investors less willing to pay high prices for stocks. Businesses that are asking investors to wait many years for their big profits to begin rolling in are affected even more.
Technology stocks have borne the brunt of the pain of higher interest rates, and they’re also among the biggest companies in the market in terms of value.
Big tech stocks swung back and forth in earlier trading and were nearly evenly split within the broader S&P 500 index. Microsoft fell 1.3%, while Hewlett Packard Enterprise rose 3.9%.
Other Big Tech stocks fell. Netflix dropped 3.4% and Facebook lost 1.2%.
Treasury yields have been broadly rising with expectations for stronger economic growth and the inflation that may accompany it.
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AP Business Writer Elaine Kurtenbach contributed.
Updated on March 25, 2021, at 4:55 p.m. ET.
