Stocks marched solidly higher, extending the market’s upward momentum as it comes off its best quarter in nearly a decade and more in Monday’s Stock Market Update.
Financial and technology companies powered the rally. Investors tend to favor those sectors when they’re confident the economy will continue growing. Consumer product makers and utility companies, which are considered safe-play investments, lagged the market.
Bond yields continued rising in another sign that investors are confident in the economy’s growth. That came as a welcome relief following a sharp drop in bond yields to their lowest levels in more than a year.
Bank of America gained 3.6%. Microchip Technology was among the big gainers in the technology sector, climbing 5.3%. Media analytics firm ComScore plunged 28.6% after it lost two top executives.
Monday’s gains followed a strong finish to the first quarter for U.S. stocks. The benchmark S&P 500 index is now up 14.3% this year, a big turnaround after the index skidded 14 percent in the final quarter of 2018.
Investors will be focusing more on corporate earnings this month, as the next big wave of company results kick into gear next week. Traders also have their eye on the U.S.-Chinese trade negotiations, which are due to resume this week. Officials from the world’s two biggest economies are aiming to put to rest a dispute over technology and other issues.
STOCK MARKET UPDATE
KEEPING SCORE: The Dow Jones Industrial Average rose 327 points, or 1.3%, to 26,255 by closing time. The S&P 500 gained 1.2% and the Nasdaq composite climbed 1.3%. The Russell 2000 index of smaller company stocks picked up 0.9%.
Major European stock indexes finished broadly higher.
THE ECONOMY: Investors were encouraged to see that a closely watched gauge of the U.S. manufacturing sector posted a surprisingly big jump in March, according to the Institute for Supply Management, an association of purchasing managers. In another positive sign, the government reported that construction spending rose at a solid pace in February.
An economic report out of China showed growth in exports, employment and orders.
ANALYST’S TAKE: The broad move higher for U.S. stocks reflected enthusiasm over the more encouraging data on the economy, said Liz Ann Sonders, chief investment strategist at Charles Schwab, but she cautioned that the market could face some bumps ahead.
“The hurdle in the near-term is still going to be earnings,” she said. “That’s the next important phase.”
Wall Street expects a contraction in earnings during the first quarter, followed by slow growth for the remainder of 2019. Any company commentary about their prospects for the next few quarters will be important in giving analysts and investors a better picture of the economy.
LESS WORRYSOME: The yield on the 10-year Treasury note rose to 2.49% from 2.41% late Friday, rising above the yield on the three-month Treasury bill.
The shift reverses an “inversion” in bond yields that alarmed investors last month because such a phenomenon, when it persists over time, has preceded recessions in the past.
Key bond yields fell to their lowest levels in more than a year on March 22 and continued to slide much of last week after the Federal Reserve said it was seeing slower growth in the economy and no longer expected to raise interest rates this year.
BANKING GETS A BUMP: Bank stocks gained as bond yields rose. Higher bond yields mean that banks can benefit from higher interest rates on loans. JPMorgan Chase rose 3.2%, Citigroup added 3.6% and Capital One Financial climbed 3.3%.
LYFT LOSES LUSTER: Lyft plunged 12.3% on its second full day of trading, falling below its initial public offering price of $72 a share. The ride-hailing company has consistently lost money but has posted supercharged growth.
Its IPO had been seen as a harbinger for other hotly anticipated offerings in fast-growing, privately held companies such as Uber, Pinterest and Slack.
THE HOUSE WINS: Wynn Resorts jumped 8% on a solid revenue report from the casino operator’s businesses in Macau and upbeat economic data from China.
KEEBLER ELVES LEARN ITALIAN: Kellogg slid 2.5% on news the packaged foods company is selling its Keebler cookie brand and other sweet snacks businesses to Ferrero, an Italian confectionary company best known for making Nutella, for $1.3 billion.
Kellogg is also selling its Mother’s and Famous Amos cookie brands, as well as its fruit-flavored snack, pie crust and ice cream cone businesses.
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