Dow closes at all-time high after Congress passes Biden’s $1.9 trillion stimulus bill
NEW YORK, NY -- Congress' approval of President Biden's $1.9 trillion coronavirus relief stimulus bill helped spur stocks on Wall Street broadly higher Wednesday, sending the Dow Jones Industrial Average to an all-time high.
The S&P 500 rose 0.6%, led by gains in energy and financial stocks. Technology companies fell, giving back some of their gains from a big rally a day earlier. The tech-heavy Nasdaq posted a small loss after an early gain faded.
A key measure of inflation at the consumer level came in lower than expected last month, helping to calm investors who had worried that prices could rise too quickly as the economy recovers. Treasury yields fell broadly following the report, including the benchmark 10-year Treasury note, which influences interest rates on mortgages and other consumer loans.
Bond yields rose sharply over the past month due to expectations for faster growth and the inflation that could follow. The fall in bond prices attracted investors reluctant to pay high prices for stocks, especially tech stocks that looked most expensive.
“It’s clear that investors expect there to be a bump in inflation in the short term, but the long-term view is pretty benign,” said Katie Nixon, chief investment officer at Northern Trust Wealth Management.
The S&P 500 rose 23.37 points to 3,898.81. The Dow gained 464.28 points, or 1.5%, to 32,297.02, thanks partly to a 6.4% jump in Boeing. The Dow's previous all-time high was about two weeks ago.
The Nasdaq slipped 4.99 points, or less than 0.1%, to 13,068.83. The index had been 1.6% higher in the early going. It jumped 3.7% on Tuesday and is now about 7.3% below the all-time high it reached on February 12.
Traders also bid up shares in smaller companies, extending the Russell 2000's winning streak to a fourth day. The index picked up 40.62 points, or 1.8%, to 2,285.68.
The Labor Department said Wednesday that U.S. consumer prices increased 0.4% in February, the biggest increase in six months. However, a closely watched measure called core inflation, which excludes food and energy prices, posted a much smaller 0.1% gain. The rise for core inflation was also below economists’ expectations.
The latest report on inflation, along with the Federal Reserve promising to keep interest rates low, has helped ease concerns over the recent rise in bond yields, Nixon said.
“Investors are coming around to the view that it’s not a bad backdrop for risk assets," she said.
Markets have benefited from calmer bond trading the last few days. The yield on the 10-year Treasury note fell to 1.52% on Wednesday. It hit 1.60% late last week, which led to a sell-off in stocks.
Investors are also betting the latest $1.9 trillion in government stimulus will help lift the U.S. economy out of its coronavirus-induced malaise. The House approved the sweeping pandemic relief package over Republican opposition on Wednesday, sending it to President Joe Biden to be signed into law. The package would provide $1,400 checks for most Americans and direct billions of dollars to schools, state and local governments, and businesses.
Banks were among the biggest gainers. JPMorgan rose 2.2%, Bank of America gained 2.9% and Citigroup climbed 3.9%. More than 75% of companies in the S&P 500 notched gains.
Technology stocks lagged the broader market. Apple fell 0.9% and Microsoft slid 0.6%
General Electric fell 5.4% for the biggest decline in the S&P 500 after the company said it would wind down its GE Capital financing business and merge its jet leasing business with Ireland-based AerCap.
Videogame company Roblox surged 54.4% in its stock market debut. The company enables users to play online games created by others on the platform.
