(Reuters) – The S&P 500 surpassed record highs on Tuesday last seen before the onset of the coronavirus crisis in February, riding on gains in shares of Amazon.com in a technology-driven rally.
Trillions of dollars in fiscal and monetary stimulus have flushed Wall Street with cash, pushing yield-seeking investors into equities, with technology-related stocks being viewed as the most reliable to ride out the crisis.
The S&P 500 rose as much as 0.4% to 3,395.06 points during the session. If the benchmark closes above 3,386.15 it would confirm that the index has been in a new bull market since its pandemic low on March 23.
Doubts about the underlying health of the economy, however, were writ large in the reaction to bumper results from Home Depot and Walmart, quickly cooling the market off after initial gains.
“This is certainly a circumstance where capital markets are looking beyond the current earnings and economic chasm that have been created by economic shutdowns in response to COVID-19,” said William Northey, senior investment director, U.S. Bank Wealth Management at Helena, Montana.
“Capital markets are looking to 2021 and 2022 levels of recovery with a degree of optimism that there is a health solution (to COVID-19) around the corner.”
Graphic: S&P 500’s bull-to-bear, bear-to-bull journey in 6 months here
At 12:57 p.m. ET, the Dow Jones Industrial Average was down 17.04 points, or 0.06%, at 27,827.87, and the S&P 500 was up 8.68 points, or 0.26%, at 3,390.67. The Nasdaq Composite was up 61.71 points, or 0.55%, at 11,191.44, hitting a record high for a second straight session.
Home Depot Inc reported its biggest rise in quarterly same-store sales in at least two decades, however, its shares fell about 1% after analysts cautioned that its sales might have hit their peak.
Walmart Inc traded marginally higher after posting its biggest-ever growth in online sales as shoppers cashed in stimulus checks and ordered everything from electronics and toys to groceries from the safety of their homes amid the COVID-19 pandemic.
“The economy, generally speaking, is doing better than what people had expected. There was an over-correction on the downside and once people realized it was overdone, then it returned,” said Brian Bethune, economist at Tufts University in Medford, Massachusetts.
- S&P 500 completes recovery from COVID-19 sell-off, hits record high
Minutes from the Federal Reserve’s recent meeting, due on Wednesday, may provide some insight into how the central bank sees the recovery playing out. The Fed has cut rates to near zero to bolster business through the pandemic.
Declining issues outnumbered advancers for a 1.34-to-1 ratio on the NYSE and for a 1.67-to-1 ratio on the Nasdaq.
The S&P index recorded 29 new 52-week highs and no new low, while the Nasdaq recorded 61 new highs and 14 new lows.
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