The S&P 500 rose to a new record on Wednesday as investors returned to trustworthy mega-cap technology stocks.
The S&P 500 rose 0.35% to a new intraday high after ending a seven-day winning streak in the previous session. The Dow Jones Industrial Average rose around 70 points. The tech-heavy Nasdaq Composite rose 0.1% after breaking a new record shortly after opening.
With interest rates falling and Wall Street worried about a peak in economic growth, investors have rediscovered their old big tech favorites. Apple and Amazon are both up more than 10% in the last month, well outperforming the S&P 500's 2.8% return.
Contrary to many predictions, the yield on 10-year US Treasuries fell to 1.306% on Wednesday. Big tech names like Apple and Google parent Alphabet rose on Wednesday. Amazon's shares were up 1% after the e-commerce giant rose nearly 5% on Tuesday.
"As has been the case for a while, bond yields and technology stocks have teamed up on the hip," Jim Paulsen, chief investment strategist at Leuthold Group, told CNBC. “Traders will watch the S&P 500 technology index near its relative price high from last September. A breakthrough above this level would certainly strengthen an ongoing leadership cycle for the technology industry. "
The Federal Reserve's minutes of its May 15-16 meeting June, during which it kept short-term interest rates close to zero but also suggested that it might adjust policy differently in the coming months, showed the central bank was discussing a tightening but was in no rush to start the process.
Energy stocks were in the red as oil prices fell. WTI crude briefly hit a 6-year high on Tuesday before falling. Crude was down again on Wednesday. Occidental Petroleum, APA Corp. and Pioneer Natural Resources were all down more than 2%.
Bank stocks, including Goldman Sachs and Bank of America, continued their retreat on Wednesday as long-term bond yields continued to fall, hurting the industry's profitability outlook. Returns at the short end of what is known as the Treasury curve, including 1-year notes and 2-year notes, have been flat to higher.
During Tuesday's regular session, the 30-share Dow fell 208 points. The S&P 500 ended the day down 0.2%, down from a record. The Nasdaq Composite rose nearly 0.2% to a new all-time high.
Investors may fear that the economy is nearing its peak and that a correction is imminent. In addition to the complacency of the market, the combination of profit margin pressures, fears of inflation, Fed tapering and possible higher taxes could contribute to an eventual decline, market strategists say.
– CNBC's Patti Domm contributed to the coverage.