Broad Stock Advance Lifts S&P 500 To Record

Renewed optimism about the economic outlook helped lift stocks on Thursday, extending a rebound following losses sparked by a hotter-than-expected inflation report earlier in the week.

Stocks rose across most sectors and among large and small businesses, with indexes held back from bigger gains primarily by weakness in a handful of large technology stocks.

The Dow Jones Industrial Average rose for a second straight session, climbing roughly 349 points, or 0.9%. The S&P 500 added 0.6%, narrowly reaching its 11th record of the year, while the tech-heavy Nasdaq Composite gained 0.3%.

A large batch of economic data appeared to have little impact on markets. Yields on U.S. Treasurys initially fell after new data showed that retail sales fell in January and that sales in previous months were lower than previously reported. The decline in yields suggested that the weak report was causing investors to bet that the Federal Reserve would cut interest rates more than previously expected.

Yields, however, quickly rebounded. The yield on the 10-year Treasury note settled at 4.239%, slightly below its closing level from Wednesday but above where it stood just before the retail sales report was released.

Other data were mixed. Weekly unemployment claims were lower than anticipated, a sign of labor market strength. A survey of home builder confidence rose for a third straight month, while industrial production missed estimates. Analysts said that both retail sales and industrial production were likely weighed down by unusually harsh winter weather last month.

Analysts have similarly argued that Tuesday’s consumer-price index report may have come in surprisingly hot due to one-off factors related to businesses resetting prices at the start of the year. That argument has helped buoy stocks again.

Before Tuesday, market gains had just been starting to broaden out—extending beyond the large tech stocks that have powered indexes higher over much of the past year.

Such nontech stocks were hard-hit on Tuesday, with investors worried that a rebound in inflation could cause the Federal Reserve to delay interest-rate cuts, increasing the chances of a recession. But they were back in favor Thursday.

“I’m actually encouraged,” said Keith Lerner, co-chief investment officer at Truist Advisory Services. “The rotation that we’re seeing beneath the surface is a sign that there’s some confidence in the economy.”

Aided by a rise in oil prices, energy companies were among Thursday’s best performing stocks. Chevron shares rose 3.4%, while Exxon Mobil gained 2.9%. Diamondback Energy reached its first fresh closing high since October.

Meanwhile, Cisco Systems fell 2.4% after the networking-equipment company gave a cautious sales outlook. Among the market-dominating tech stocks, Alphabet lost 2.2%, Nvidia slid 1.7% and Microsoft dropped 0.7%. Facebook parent Meta Platforms was an exception, rising 2.3%.

Write to Sam Goldfarb at [email protected]