US stocks edged higher on Tuesday in a choppy trading session that saw modest gains for both economically sensitive and growth stocks.
The S&P 500 was up less than 0.1% at 4 p.m. EST, as shares of homebuilders, energy stocks and tech companies rose. The gains were enough for the index to close at its 33rd record of the year, a number that equals the number seen for all of 2020.
The conduct of Tuesday’s rally was, in part, data from private research group The Conference Board. Its consumer confidence index rose in June, beating analysts’ expectations. The survey found that consumers’ optimism was fueled by expectations of improving business conditions and increased incomes in the coming months.
Additional data released on Tuesday also showed home price growth hit a record high in April. Shares of homebuilders including PulteGroup and Lennar rose 2% and 0.8% respectively.
Stocks have rallied in recent weeks, with the S&P 500 and Nasdaq Composite reaching new highs on Monday, driven by investor confidence in the economic recovery and the prospect of further government spending. Fund managers remain cautious about whether the more transmissible Delta variant of the coronavirus could slow the global economic recovery or disrupt supply chains for essential commodities.
Still, most analysts expect stocks to rise higher.
“We still have to run when it comes to stocks, but I think there is some form of summer lull ahead and we could see some zigzags,” said Daniel Egger, chief investment officer at St Gotthard Fund Management, on potential small peaks and valleys in the market.
“I wouldn’t be surprised to see an air pocket form when the markets pull back a bit. ”
Investors and market watchers expect this week to bring muted volumes ahead of the July 4th weekend and ahead of Friday’s jobs numbers. Economists polled by the Wall Street Journal expect 706,000 new jobs to be added to the US economy.
Many market strategists also expect the rotation between growth stocks and economically sensitive stocks to continue to be volatile in the coming weeks.
“You see the tug-of-war between value and growth right now, and where it really comes from is the tug-of-war between whether inflation is transient or real,” said JJ Kinahan, chief strategist of markets at TD Ameritrade.
Inflation remains a major concern for investors today. A recent Bank of America Global Research survey found that fund managers are currently looking at both inflation and a “taper tantrum” in the bond market, which means a possible increase in Treasury yields once the Fed shifts. indicated that it will tighten its monetary policy, as the main risks to the markets.
In corporate news, Morgan Stanley rose 3.4%. The bank doubled its quarterly dividend on Monday and announced plans to repurchase up to $ 12 billion of its shares. Goldman Sachs gained 1.1% after increasing its dividend.
Tech companies, including social media company Snap and Advanced Micro Devices, also rose, each gaining 2% or more. Shares of energy companies slashed earlier gains.
Brent crude, the international benchmark for oil, rose about 0.2% to $ 74.27 a barrel. The Organization of the Petroleum Exporting Countries and its allies are meeting on Thursday, where they are expected to discuss a modest increase in production.
In bond markets, the yield of the benchmark 10-year US Treasury index edged up to 1.489%, from 1.478% on Tuesday. Yields rise when bond prices fall.
Abroad, the Stoxx Europe 600 grew by 0.3%.
Japan’s Nikkei 225 fell 0.9% at the close of trading, while the Hang Seng index fell 0.9%. In mainland China, the Shanghai Composite Index fell 0.9%.
–Hardika Singh contributed to this article.
Write to Will Horner à [email protected] and Caitlin McCabe at [email protected]
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