By Shashank Nayar and David French
(Reuters) – The S&P 500 and Nasdaq moved to fresh record highs on Monday, led by technology stocks, as investors responded positively to the Federal Reserve’s dovish comments on tapering in monetary stimulus and what that might mean for the economic recovery.
Apple Inc jumped 3.1% to an all-time high, while Microsoft Corp, Amazon.com, Google-owner Alphabet Inc rose between 0.9% and 2.5%, helping the tech-heavy Nasdaq outperform the S&P 500 and the Dow.
High-growth tech stocks tend to benefit from expectations of lower rates because their value rests heavily on future earnings.
The benchmark index is tracking its longest monthly winning streak since 2018 on the promise of easy money, with investors shrugging off signs of a slowing economic recovery and surging COVID-19 cases.
Fed Chair Jerome Powell said on Friday the central bank would continue to be cautious in its approach to tapering its massive pandemic-era stimulus, while reaffirming a steady economic recovery.
“The market was wholly prepared for a taper timeline last week and the Fed not really commenting has helped give markets an added push on hopes that easy policies will help offset some risks around rising infection cases,” said Ross Mayfield, investment strategist at Baird in Louisville, Kentucky.
“Although, if the Fed continues to be so dovish in its policy meetings going ahead, markets might think that there are some problems brewing in the economic recovery process.”
The S&P 500 has risen more than 3% so far in August – a seasonally weak period for stocks – and Wells Fargo analysts said last week they expect the index to rise another 8% by the end of the year.
It is also on track to log one of its best year-to-date returns through August of the past six decades, said Chris Larkin, managing director of trading at E*Trade Financial.
In afternoon trading, the S&P 500 gained 24.97 points, or 0.55%, to 4,534.34 and the Nasdaq Composite added 146.10 points, or 0.97%, to 15,275.60.
The Dow Jones Industrial Average, on the other hand, was about flat as economically sensitive energy stocks slipped as they absorbed possible impacts from Hurricane Ida on the U.S. offshore oil industry. [O/R]
U.S.-listed shares of Chinese gaming firm NetEase Inc slumped almost 4% as Chinese regulators slashed the amount of time players under the age of 18 can spend on online games to an hour on Fridays, weekends and holidays.
PayPal Holdings Inc advanced 3.4% on a CNBC report that the financial services firm was exploring the development of a stocks trading platform for its U.S. customers. The news helped push Robinhood Markets Inc down 3.6%.
The S&P 500 posted 74 new 52-week highs and no new lows; the Nasdaq Composite recorded 137 new highs and 27 new lows.
(Reporting by Shashank Nayar in Bengaluru and David French in New York; Editing by Arun Koyyur and Lisa Shumaker)
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