By Yasin Ebrahim
Investing.com – The S&P 500 topped the historic 4,000 level Thursday, as tech turned on the swagger thanks to falling bond yields, but value stocks are expected to set the pace as the new quarter gets underway, according to an expert.
The S&P 500 rose 0.95% to hit a record high of 4,014.20, the Dow Jones Industrial Average rose 0.35%, or 115 points, the Nasdaq Composite was up 1.56%.
Tech stocks started the quarter in rally mode, continuing to their rebound from oversold levels, driven by megacap FANG.
Facebook (NASDAQ:FB), Apple (NASDAQ:AAPL), Amazon.com (NASDAQ:AMZN), Netflix and Google-parent Alphabet (NASDAQ:GOOGL), were higher.
Chip stocks continued their recent revival, rallying 3% to help push the broader tech sector higher following bullish quarterly results from Micron Technology (NASDAQ:MU) that stoked investor appetite for the sector.
Still, there are some on Wall Street who are wary of high-valued tech stocks in a rising rate environment, and believe value stocks are primed to continue their recent outperformance relative to growth stocks, spurred by a robust recovery.
"I think [tech stocks] were definitely oversold .. and due for a rebound," Eric Diton, president and managing director at The Wealth Alliance, said in an interview with Investing.com.
"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."
Financials and energy were among the biggest gainers for cyclicals, 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), Devon Energy (NYSE:DVN) were among the biggest gainers for the sector.
On the labor market front, a 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 needed 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.