U.S. stocks hovered near record highs on Wednesday as the market completed a successful first half and second quarter of 2021.
The Dow Jones Industrial Average rose more than 100 points, while the S&P 500 gained less than 0.1%. The Nasdaq 100 lost about 0.2%.
Wednesday is the last day of the second quarter and the last day of the first half of 2021. For the year to date, the S&P 500 is up 14%, while the Nasdaq Composite and the Dow are each up 12%. For the quarter, the S&P 500 is up 8%. The S&P 500 and Nasdaq all posted new record closings on Tuesday.
The S&P 500 is heading for its fifth consecutive positive month, rising 2.1% to 4,291.80 in June. The broad index is also on track for its best first half since 2019.
Investors have shrugged off the high inflation readings and continued to buy stocks in hopes that an economic comeback for the pandemic would continue and that the Federal Reserve would for the most part maintain its loose policies. The top three Dow winners this year are Goldman Sachs, American Express, and Walgreens Boots Alliance, all of which are up more than 30%. Chevron, Microsoft, and JPMorgan Chase are each up more than 20%. The technology and health sectors of the S&P 500 both closed Tuesday with record highs.
The gains came as nearly 60% of adults in the US received a COVID-19 vaccine, which allows the economy to reopen quickly. Still, new variants of the virus have raised some concerns that other restrictions such as wearing masks would have to be reintroduced as the pace of vaccinations has slowed.
Investors have "a number of reasons to remain constructive," wrote Tom Lee, managing partner and head of research at Fundstrat Global Advisors, citing economic dynamism, strong credit markets and possible fiscal stimuli.
Lee raised his S&P 500 target for 2021 from 4,300 to 4,600 in a statement to his customers on Tuesday evening. The new forecast means a 7% gain from here.
Some investors and strategists have cited the spread of the Delta variant of Covid-19 as a risk for the markets in the second half of the year. However, JPMorgan's Marko Kolanovic said in a statement to clients on Wednesday that the variant shouldn't hurt stock markets, citing low death rates in countries with widespread vaccination.
Walmart, Boeing and Chevron were some of the Dow's biggest movers on Wednesday, helping the industry average outperform the broader indices.
Big tech stocks, including Apple and Facebook, were mixed in early trading on Wednesday. The Wall Street Journal reports that the Biden administration is working on an executive order that would direct government agencies to tighten control over industries where a few companies dominate. It is the latest in a series of moves by Biden to contain the power of big business, especially in the tech industry.
Good first halves for the market usually bode well for the rest of the year. Whenever there was double-digit growth in the first half of the year, the Dow and S&P 500 never ended this year with an annual decline, according to Refinitive data from 1950.
One group that helped the broader market to its latest record high are semiconductors. The VanEck Semiconductor Index has risen 6% since June 18 and more than 3% in the first two days of this week.
“The semis have recovered strongly and in the last two trading days have finally broken the downward trend that has existed since this high in mid-February. New highs and a broken downward trend? Bespoke Investment Group said in a communication to clients.
During Tuesday's regular session, stocks barely changed in light trading, although the S&P 500 hit its fourth straight session and an all-time high. The Dow rose 9 points, or less than 1%. The S&P 500 ended the day 0.03% higher and the Nasdaq Composite ended the day 0.2% higher
Home builder stocks rose Tuesday after S&P CoreLogic Case-Shiller released its National Home Price Index, which showed home prices rose more than 14% year over year in April.
Pending home sales also climbed to their highest level since 2005 in May. However, mortgage demand fell last week, the Mortgage Bankers Association said on Wednesday, with high prices and low supply crowding out some potential buyers.
The Institute for Supply Management's Chicago Purchasing Managers Index came in lower than expected in June but was still expanding.
Stocks are unlikely to see much movement until Friday's employment report gives a better idea of the economy. According to a Dow Jones poll, economists expect 683,000 new jobs in June.
On Wednesday, payroll firm ADP reported that private payrolls rose 692,000 in June, exceeding expectations. However, the company's May figure has been revised downwards.
– CNBC's Robert Hum contributed to this report.