By Yasin Ebrahim
Investing.com – The S&P 500 closed above 4,000 level for the first time ever Thursday, led by tech and value, but it's the latter that is set for swashbuckling gains as the rotation to cyclicals is not over, according to one expert.
The S&P 500 rose 1.18% to closed at a record of 4,019.90, the Dow Jones Industrial Average rose 0.52%, or 171 points, the Nasdaq Composite was up 1.76%.
Tech stocks started the quarter in rally mode, continuing to their rebound from oversold levels, but the reprieve could prove short-lived as the recent rotation to value from growth still has room to go.
"It took a long time for that previous rotation [following the tech bubble] to play out," Eric Diton, president and managing director at The Wealth Alliance, said in an interview with Investing.com. "We're here again, growth got very expensive and value is starting to outperform again, but no one believes in [the value] trade and they're all saying it's going to end."
"But if you look at the returns in the last 12 months on tech versus everything else the gap is still big. Three years, five years, or even 10 years ago, the growth outperformance relative to value is historic. So, value has a lot of catching up to do," Diton added.
Facebook (NASDAQ:FB), Apple (NASDAQ:AAPL), Amazon.com (NASDAQ:AMZN), Netflix and Google-parent Alphabet (NASDAQ:GOOGL) were higher. Chip stocks also helped push the broader tech sector following bullish quarterly results from Micron Technology (NASDAQ:MU) that stoked investor appetite for the sector.
Financials and energy were among the biggest gainers for value, with the latter aided by rising oil prices even as major oil producers agreed to raise output.
Marathon Oil (NYSE:MRO), Diamondback Energy (NASDAQ:FANG) and Devon Energy (NYSE:DVN) were among the biggest gainers for the sector.
On the labor market front, an unexpected rise in jobless claims didn't dent optimism for a strong rebound in nonfarm payrolls slated to be released Friday.
"[W]e remain optimistic about claims and the labor market more broadly in the near-term," Jefferies (NYSE:JEF) said in a note. "With more vaccine distribution and further reopening of the labor-intensive service sector, we will see claims continue to decline on trend over time."
In other news, Nio (NYSE:NIO) climbed 2% after reporting a 373% jump in deliveries for March from the prior-year, providing investor with some respite after the Chinese electric vehicle trimmed its production forecast earlier this month, citing supply-chain disruptions.
The record-setting day for stocks comes a day after President Joe Biden unveiled his $2.2 trillion stimulus package to support investment in key infrastructure including roads, airports, broadband rollout and more.
The bill, which will likely need to be tweaked to win the backing of moderate Democrats, represents a double edge sword, however, as it will be partly funded by tax increases that could force corporations to rein in stock buybacks and dividends.
"When Trump put through those tax cuts, we saw a pretty big increase in buyback activity and notable dividend increases. So [a decline in buybacks and dividends] is entirely possible, and would make some sense," Diton said.