Though the Dow spent the morning almost 150 points in the red but did recover to end the session ever so slightly in the black, the Nasdaq and S&P fared considerably better as investors flocked back to tech to pick up bargains after being down for a week. But with the Dow and S&P already at records, the slight increases put them at still new records and, as today’s expert put it, “for good reasons.”  “The fundamental backdrop is supportive of higher equity prices” with Q2 going great, interest rates low and inflation under control. 

Yesterday, the CPI report showed prices not on the rise but today the producer prices report showed the largest annual increase in over a decade, an increase attributed almost entirely to the supply chain problems. So what will the Fed do at Jackson Hole later this month? The good news is that the market consensus seems to be that tapering or not, it will not impact the gains in equities. Volume was again below average at 8.3 billion but, as also noted, this is typical for August.

Thu  August 12, 2021  4:20 PM

S&P 500, Dow set fresh records as recovery marches forward

By Herbert Lash

DJ: 35,484.97  +220.30       NAS: 14,765.14  -22.95        S&P: 4,447.70  +10.95     8/11

DJ: 35,499.85  +14.88         NAS: 14,816.26  +51.13       S&P: 4,460.83  +13.13     8/12

NEW YORK, Aug 12 (Reuters) - The Dow and S&P 500 jumped to record closes for a third straight day on Thursday, with mega-cap technology stocks driving the market higher as investors warmed to jobs data showing a steady U.S. economic recovery.  Apple Inc (AAPL.O), Microsoft Corp (MSFT.O), Amazon.com (AMZN.O), Google parent Alphabet Inc (GOOGL.O) and Facebook Inc (FB.O), which account for a quarter of the S&P 500's market capitalization, led shares on the S&P and tech-heavy Nasdaq.  The Dow eked out a record close at the bell.

Tesla Inc (TSLA.O), Nvidia Corp (NVDA.O) and Moderna Inc (MRNA.O) also rallied on a day in which more stocks declined than advanced.  "Today the S&P 500 reached another all-time high, and is at an all-time high for good reasons," said Terry Sandven, chief equity strategist at U.S. Bank Wealth Management in Minneapolis.  The fundamental backdrop is supportive of higher equity prices, Sandven said. Earnings are trending higher, interest rates are low and inflation remains moderate, he said.

The Dow Jones Industrial Average (.DJI) rose 14.88 points, or 0.04%, to 35,499.85, the S&P 500 (.SPX) gained 13.13 points, or 0.30%, to 4,460.83 and the Nasdaq Composite (.IXIC) added 51.13 points, or 0.35%, to 14,816.26.

Traders snapped up big tech shares that had missed out on the overall market marching higher the past week, according to Tim Ghriskey, chief investment strategist at Inverness Counsel.  "The move into big tech is simply a trading opportunity. Big tech has been down for a week or so, underperforming the market pretty significantly," Ghriskey said. "There are bargain hunters coming in, jumping on those securities."

Apple added the most to the S&P, rising 2.1%, followed by Microsoft with a 1.0% gain and Tesla adding 2.0%. Growth stocks (.RLG) rose 0.5%, outpacing a 0.06% gain in value shares, in a reversal of a recent trend.  Healthcare (.SPXHC) and technology (.SPLRCT) were the best- performing S&P 500 sectors. Energy (.SPNY) weighed the most on the market.

The number of Americans filing claims for unemployment benefits fell again last week as the economic recovery from the COVID-19 pandemic continued. read more Data on Thursday showed U.S. producer prices posted their largest annual increase in more than a decade last month, raising inflation concerns, after Wednesday's U.S. consumer price index reading indicated the pace appeared to be slowing.  The data reflect well-known supply chain challenges that will not change Federal Reserve policy, said Mike Loewengart, managing director of investment strategy at E*TRADE Financial.

"Everyone is expecting potentially tapering to begin in September," he said. "But for the most part, it would not change the conducive environment that we are currently in, for additional gains in equity markets."  Trading volume has slumped, typical of August, as a stellar second-quarter earnings season winds down. Investors are now waiting for the Fed's annual meeting in Jackson Hole, Wyoming, at month end for clues on its plans to tighten policy.

Volume on U.S. exchanges was 8.31 billion shares, compared with about 9.55 billion average for the full session over the last 20 trading days.

Micron Technology (MU.O) slid 6.4%, one of the biggest weights on the S&P 500, after Morgan Stanley downgraded the stock to "equal-weight."  In earnings-related moves, Baidu Inc's U.S. shares fell 3.2% even after the company posted upbeat quarterly revenue.  Palantir Technologies Inc (PLTR.N) jumped 11.4% after the U.S. data analytics firm forecast third-quarter sales above expectations. read more

Declining issues outnumbered advancing ones on the NYSE by a 1.18-to-1 ratio; on Nasdaq, a 1.34-to-1 ratio favored decliners.  The S&P 500 posted 45 new 52-week highs and two new lows; the Nasdaq Composite recorded 85 new highs and 148 new lows.