Stocks add to weekly gains, helped by infrastructure deal
Stocks closed higher on Wall Street on Thursday as traders were encouraged by a bipartisan deal on infrastructure spending as well as some positive reports on the economy.
The Standard & Poor’s 500 index marked another record high, surpassing the peak it set early last week. Stocks added to their gains in the afternoon after President Biden and a bipartisan group of senators announced the infrastructure deal, which is sure to benefit companies in the construction industry.
The plan, which will cost $973 billion over five years, is the culmination of months of talks on both sides of the political aisle.
Chris Zaccarelli, chief investment officer at Independent Advisor Alliance, said the proposed agreement is favorable for industrial, financial and energy stocks, although “the general reopening of the economy and renewed, post-COVID-19 economic growth is the most likely driver” of the market going forward.
The S&P 500 rose 24.65 points, or 0.6%, to 4,266.49. The Dow Jones industrial average rose 322.58 points, or 1%, to 34,196.82. The Nasdaq composite added 97.98 points, or 0.7%, to 14,369.71.
Small-company stocks did much better than the rest of the market. The Russell 2000 index climbed 30.15 points, or 1.3%, to 2,333.62.
Markets have calmed since the Federal Reserve surprised investors last week by saying it could start raising short-term interest rates by late 2023, earlier than expected, if recent high inflation persists.
The interest rates kept super-low by the Fed to carry the economy through the pandemic have propped up prices across markets, and any change would be a big deal, so the Fed’s announcement triggered selling of stocks and a rise in Treasury yields last week. That selling reversed this week: The three major indexes are all up more than 2% this week and are once again near records.
Investors had little negative reaction to a report that showed that 411,000 Americans filed for unemployment benefits last week, down 7,000 from the week before. That was a much more modest decline than investors had expected and the second week in a row when unemployment benefits claims stalled after declining steadily for months.
Meanwhile, orders to U.S. factories for big-ticket manufactured goods rose for the 12th time in the last 13 months in May, pulled up by surging demand for civilian aircraft. The Commerce Department said Thursday that orders for durable goods — items meant to last at least three years — climbed 2.3% in May, reversing a 0.8% drop in April and coming despite a backlogged supply chain and a shortage of workers.
