Stocks fell broadly in afternoon trading as investors backed away from technology and communications companies
TOKYO — Stocks fell broadly in afternoon trading as investors backed away from technology and communications companies.
Despite the decline, the market is on pace for its best month so far this year, as investors remain optimistic that the pandemic is slowly and steadily coming to a close.
The S&P 500 was down 0.6% as of 12:47 p.m. Eastern. The Dow Jones Industrial Average fell 209 points, or 0.6%, to 33,850 and the Nasdaq was also down 0.6%. With the exception of the Dow, the other two indexes are on pace for modest gains this week.
At this rate the S&P 500 is on track for its best month since November 2020, when President Joe Biden was elected. The benchmark index is up 5.4% this month, helped mostly by signs that large-scale coronavirus vaccination programs are helping people return to jobs and normal behaviors after more than a year of restrictions.
Under Biden, the Dow notched its best first 100 days under a new president since Franklin Delano Roosevelt took office in 1933, according to LPL Financial, with a 9.9% return as of April 29. Analysts are warning that the solid gains for stocks so far this year could ease, with the period between May and October typically being the weakest for gains on Wall Street.
The Commerce Department said Thursday that the U.S. economy grew at a brisk 6.4% annual rate in the last quarter and is likely to accelerate further as more vaccinations are administered and COVID-19 cases continue to fall.
“The broad story is one of case counts on the whole being lowered across the majority of the world and vaccines ramping up generally across the world and that’s getting us back to normal,” said Jason Pride, chief investment officer of private wealth at Glenmede.
There’s also the trillions of dollars in government support that has gone out to help the U.S. economy recover from the pandemic. The Commerce Department said U.S. household incomes surged 21% last month, driven largely by the $1,400 payments that went out to most Americans as part of President Biden’s economic package.
The Biden administration is also pushing for more infrastructure spending to help further boost the economy. The big policy and spending proposals have investors looking further up the road to what a “new normal” looks like after the pandemic, Pride said. Key concerns include how spending will impact taxes and inflation.
Treasury yields have stabilized after jumping earlier this year as concerns about inflation rose. The yield on the 10-year Treasury slipped to 1.63% from 1.64% late Thursday.
Investors have also gotten strong corporate earnings which have helped justify higher stock prices. Amazon rose 1% after the e-commerce giant reported that its profits more than tripled in the latest quarter. More than half of the companies in the S&P 500 have reported their results, which show earnings growth of 54% percent so far for index, according to FactSet.
Investors will get another big dose of earnings reports next week, including results from drugmakers Eli Lilly, Merck as well as Pepsi, Colgate-Palmolive, the railroad CSX and drugstore giant CVS. Investors will also get April’s jobs report next week.