A Very Round Number

By Matthew Klein |  Thursday, April 1 Happy 4,000! America’s S&P 500 index hit a new record today, breaching the 4,000 level for the first time ever as large-cap stocks gained 1.2% on low trading volume. The Russell 2000 small-cap index gained 1.5%, while the tech-heavy Nasdaq Composite was up 1.8%. Unlike the S&P, the Russell and the Nasdaq are both down about 5% from their most recent highs, although the Russell is still up more than 14% year-to-date, compared with 7% for the S&P. Markets in the rest of the world also had a good day, with gains in Australia, Canada, China, Europe, Hong Kong, Korea, Japan, and the U.K. Canada’s TSX hit a new all-time high, while the STOXX Europe 600 index is almost back to the all-time high reached on Feb. 19, 2020. Bond yields ticked slightly lower, while gold, silver, and oil all moved higher. The drop in bond yields—the 10-year yield fell by the most in one day since Nov. 12—comes after a brutal quarter for Treasury investors, with a loss of 4.6%. Barron’s Alex Scaggs notes that the first quarter of 2021 was the worst quarter for total returns since the third quarter of 1980. Investors in longer-term debts faced much larger losses, with the 15+ Year index down 13%. Corporate bonds also fared poorly, as narrowing credit spreads weren’t enough to offset the increase in real interest rates and higher expectations for inflation. The uptick in oil prices, meanwhile, came on the heels of an announcement from the OPEC+ group that it would begin to bring more production online to meet the rising demand from a recovering global economy. Investors apparently think the agreement will ultimately benefit American shale producers and domestic refiners, with such U.S. energy stocks as Diamondback Energy, Marathon Oil, Devon Energy, HollyFrontier, APA Corp (the new name for the parent of Apache), Hess, Valero Energy, and Marathon Petroleum dominating the list of the day’s top performers. Clothing retailers, including PVH Corp, Capri Holdings, Macy’s, Ralph Lauren, Kohl’s, and Hanesbrands, were among the biggest losers of the day, although healthcare stocks such as DaVita, Humana, Anthem, UnitedHealth Group, CVS Health, and HCA Holdings also fared poorly.

 

DJIA: +0.52% to 33,153.21 S&P 500: +1.18% to 4,019.87 Nasdaq: +1.76% to 13,480.11 The Hot Stock: Diamondback Energy +10.5% The Biggest Loser: CarMax -7.0% Best Sector: Energy +2.6% Worst Sector: Consumer Staples -0.5%