U.S. stocks jumped Thursday, as investors piled back into technology stocks that have lagged behind in recent weeks amid a sharp uptick in bond yields.
The Nasdaq Composite surged 1.6% after the opening bell, led higher by megacap technology stocks including Apple, Netflix and Facebook. The S&P 500 climbed 0.7%. The Dow Jones Industrial Average rose about 140 points, or 0.4%, a day after the blue-chip index closed above 32000 for the first time, notching a new a record.
Investors’ demand for stocks has revived as bond markets have calmed. The yield on 10-year Treasury notes, which moves inversely to the price, ticked up to 1.526% from 1.520% Wednesday. Yields climbed as high as 1.594% earlier this week after starting 2021 below 1%.
Stocks have been buffeted by sharp moves in bond yields, fueled by uncertainty over how the $1.9 trillion relief bill passed by the House Wednesday will ripple through the U.S. economy.
Concerns that the size of the stimulus would lift inflation beyond the Federal Reserve’s comfort zone and trigger an increase in interest rates recently prompted yields to rise. That sapped appetite for shares in tech companies, which had benefited from an extended spell of low rates. At the same time, optimism about the economic outlook has bolstered demand for shares of companies that would benefit from a relaxation of lockdowns.
Muted inflation data for the start of the year have calmed nerves about the outlook for rates. But bond yields will likely remain volatile, shifting momentum between different segments of the stock market, said Monica Defend, head of research at French asset manager Amundi.
“Eventually it should be positive for the equity market if we have a bit more inflation, a bit more growth,” she said.
Tech stocks including Apple, Netflix and Facebook were among the stocks that surged in morning trading, each climbing 1.6% or more. Data-mining firm Palantir Technologies surged 5.7%. Electric-vehicle maker Tesla rose 2.6%.
Shares of videogame retailer and online-trading sensation GameStop dropped about 8.1%. Volatility has returned in recent sessions to the meme stocks that are the darlings of individual investors who gather on internet forums.
U.S. investors have also been closely watching the labor market for signals about how quickly the economy is improving as Covid-19 vaccines continue to rollout. On Thursday, fresh data showed that jobless claims continued to ease. Filings for unemployment benefits dropped to 712,000 last week, Thursday’s data showed, slightly below economists’ estimates.
Investors’ appetite for U.S. government debt will face another test Thursday with the planned auction of $24 billion in 30-year bonds. The Treasury sold $58 billion of three-year notes on Tuesday and $38 billion of 10-year notes Wednesday.
In overseas markets, the Stoxx Europe 600 edged up 0.3%.
The euro ticked up 0.2% to $1.1955 after the European Central Bank said it would raise the pace of its purchases of eurozone debt after a recent rise in bond yields. The yield on Germany’s 10-year government bonds, regarded as the benchmark safe asset in the single-currency zone, fell to minus 0.361%.
“The eurozone can’t afford tightening financial conditions, and we’ve been importing that from the higher rates in the U.S.,” Ms. Defend said before the rate decision. “It is something the ECB is looking at as a matter of concern.”
China’s Shanghai Composite Index jumped 2.4% in its biggest one-day rise since October. Markets rose elsewhere in Asia, with Japan’s Nikkei 225 and South Korea’s Kospi gaining 0.6% and 1.9%, respectively.
—Caitlin McCabe contributed to this article.
Write to Joe Wallace at Joe.Wallace@wsj.com
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