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Dow Industrials, S&P 500 Open Higher; Nasdaq Adds 1.1%

By Anna Hirtenstein 

U.S. stocks opened higher Thursday on the prospect of as much as $1.8 trillion in new government spending that could spur economic growth.

The S&P 500 added 0.8%, suggesting that the broad-market index may resume its march toward a fresh record. The Nasdaq Composite Index climbed over 1%. The Dow Jones Industrial Average advanced 192 points, or 0.6%.

The stock market rally resumed after President Biden outlined proposals on Wednesday for his new American Families Plan, which would boost spending on child care, education and paid leave. Investors' optimism was also buoyed after Federal Reserve Chairman Jerome Powell said the central bank would continue supporting the economy, while noting signs that growth has revived and the labor market is strengthening.

"In this environment, it is very difficult to be bearish," said Gregory Perdon, co-chief investment officer at private bank Arbuthnot Latham.

A high level of household savings is morphing into consumer spending as the economy reopens and will also deliver a boost, he added. "I struggle to see any factor over the course of the next six months that would outweigh this ready-steady-spend narrative."

Mr. Powell on Wednesday said that the recent rise in inflation was largely reflecting "transitory factors," and that the Fed will hold rates steady until the labor market is back to full strength and inflation has reached the central bank's goal of averaging 2%. His comments helped reassure markets that the Fed won't shift course abruptly.

"They are going to let the economy run hot," Mr. Perdon said. "The prospect of there being a tightening in the very near term is just not on the table."

Earnings season remains under way, with Amazon.com and Twitter slated to post results after market hours. Both stocks are up in premarket trading, with Amazon.com adding over 1% and Twitter rising more than 3%.

Ahead of the opening bell, Apple shares rose over 2% after reporting that quarterly profit more than doubled to a record, and said it expects the surge in sales to continue. Facebook jumped 8% after the social-media giant reported a boom in its ad business that drove revenue and profit sharply higher.

In other premarket trading, eBay tumbled over 8% after saying it expects earnings on a per-share basis for the current quarter to come in below analysts' expectations. Qualcomm rose nearly 6% after reporting a jump in revenue boosted by high demand for 5G phones. Comcast gained almost 4% after it posted a 55% rise in first-quarter profit.

Fresh data Thursday showed that the U.S. economy expanded at a 6.4% annual rate in the first quarter, expanding a consumer-led rebound from the pandemic.

Initial jobless claims, a proxy for layoffs, reached 553,000 for the week ended April 24. That is the lowest level since the pandemic began more than a year ago, but was above forecasts from economists polled by The Wall Street Journal.

In bond markets, the yield on the benchmark 10-year Treasury note ticked up to 1.657%, from 1.621% on Wednesday. Yields rise when bond prices fall.

"There is a pretty strong fundamental backdrop that is just not supportive for bonds. Growth is accelerating in most of the developed world," said Salman Baig, multiasset investment manager at Unigestion. He expects yields to keep rising in the longer term. "This environment of good growth and significant building inflationary pressures is a very negative environment for government bonds."

Overseas, the pan-continental Stoxx Europe 600 rose 0.3%.

Among European equities, Nokia rallied nearly 14% after the telecommunications company's earnings beat expectations, driven by sales of 5G network equipment. Shares of Spanish bank Bankinter plunged 22% after it spun-off its insurance business.

The Shanghai Composite Index advanced 0.5% by the close of trading, and Hong Kong's Hang Seng added 0.8%.

Write to Anna Hirtenstein at anna.hirtenstein@wsj.com

 

(END) Dow Jones Newswires

April 29, 2021 09:47 ET (13:47 GMT)

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