By Yasin Ebrahim
Investing.com – The S&P 500 and Dow hit records Monday as tech and reopening stocks surged on a wave of economic optimism after data showed the underlying strength in the recovery continues to gather pace.
The S&P 500 rose 1.35%, and had hit an intraday record high of 4,083.80, the Dow Jones Industrial Average rose 1.1%, or 399 points, to an all-time high of 33,617.95, the Nasdaq Composite was up 1.53%.
ISM nonmanufacturing data for March jumped to a reading of 63.7, beating expectations of 59. This represents the highest reading for the service sector index since 1997.
"The reopening of leisure & hospitality hit a higher gear in March and evidence suggests that it will hit an even higher gear in April. The vaccine distribution process has been progressing well, and a more normal economy appears to be close at hand," Jefferies (NYSE:JEF) said in a note.
The services sector is critical component of the U.S. economy, accounting for roughly 80% of U.S. private-sector gross domestic product (GDP).
The strong data on services come just days after the jobs report showed the U.S. created 916,000 in March, well above the 660,000 expected, with the unemployment rate falling to 6% from 6.2% previously.
The backdrop of positive data support the reopening trade – bullish bets on stocks tied to the progress of the economic reopening – with airlines, cruise lines and casinos rising sharply.
United Airlines Holdings (NASDAQ:UAL), American Airlines Group (NASDAQ:NASDAQ:AAL), Carnival (NYSE:CCL) and Norwegian Cruise (NYSE:NCLH),MGM and Wynn were sharply higher.
Tech also played its role in the record-setting day on Wall Street, rising more than 1%, led by a revival of megacap tech ahead of the quarterly earnings season.
Microsoft (NASDAQ:MSFT), Google-parent Alphabet (NASDAQ:GOOGL), Facebook (NASDAQ:FB) hit record highs, and Amazon.com (NASDAQ:AMZN) and Apple (NASDAQ:AAPL) were up more than 2%.
Alphabet's Google was boosted further by positive news confirming the search-engine giant had won a court ruling that declared it had not infringed Oracle (NYSE:ORCL)'s Java software. In a separate announcement, Google said it will stop using Oracle's software and instead use rival software from SAP SE ADR (NYSE:SAP).
Despite the gains in tech, the sector remains below its previous record high level relative to other sectors – a factor that may cap the broader market advance.
"There is a minor divergence in market breadth just as the S&P hits its 4,000 milestone- and we are not seeing (yet) aligning new highs from other benchmarks such as the NASDAQ Comp, the Russell 2000, or the NYSE Composite,” Janney Montgomery Scott said in a note.
In consumer discretionary stocks, Tesla (NASDAQ:TSLA) was one of the standout performers on the day, rising more than 5% after the electric vehicle maker reported record first-quarter deliveries.
Energy was the exception to the broader-market rally, pressured by a fall in oil prices after major oil producers agreed to ease production cuts.
In other news, Treasury Secretary Janet Yellen called for a global minimum corporate tax "to ensure that governments have stable tax systems that raise sufficient revenue to invest in public goods and respond to crises." The push for the tax measure comes ahead of a virtual meeting with global counterparts and in the midst of Biden's $2.3 trillion infrastructure proposal.