The S&P 500 climbed Thursday, surpassing its all-time high a week ago as the market fully recovered the losses caused by the Federal Reserve's surprise monetary policy swing.
The broad equity benchmark rose 0.5% to hit an all-time high, hitting its previous record on June 14th. The Dow Jones Industrial Average gained 260 points, or 0.8%, less than 3% from its all-time high. The Nasdaq Composite rose 0.6% to hit another record.
A broad group of stocks gained to push the benchmarks to new highs. Communications services, consumer discretionary, healthcare and technology were the top performing sectors. Tesla gained more than 4% while GM and Caterpillar gained about 1% each.
The blue-chip Dow had its worst week since October, down 3.5% last week after the Fed raised inflation expectations and forecast interest rate hikes back in 2023. Hawk sentiment. The S&P 500 fell 1.9% last week.
Fed Chairman Jerome Powell's comments during a congressional hearing on Tuesday reiterated that inflationary pressures should be temporary, which appeared to ease market volatility.
"As the market hits new highs this week, investors could come to terms with the inevitable Fed hike," said Mike Loewengart, managing director of investment strategy at E-Trade.
Data released Thursday showed that unemployment claims totaled 411,000 for the week ending June 19, more than an estimate of 380,000 by economists polled by Dow Jones.
"The passages read are further proof that the economy is coming back to life, albeit perhaps a little more bumpy than some expected at the time," said Loewengart.
Bank stocks rose ahead of the Fed's annual stress test results, due to be released on Thursday after the bell. The test examines how banks behave during various hypothetical economic downturns. Banks were forced to freeze dividends and stop buying back during the pandemic. These results should give them the green light to eventually increase their payouts. Goldman Sachs shares were up about 1%.
Traders are also watching the negotiations on infrastructure packages. A bipartisan group of senators who have made progress on a plan will meet with President Joe Biden in the White House on Thursday. Legislators have worked for weeks to put together a package of roughly $ 1 trillion that could get through Congress with the support of both parties. Republicans have opposed the president's proposal to raise the corporate tax rate from 21% to 28%.
– CNBC's Hugh Son contributed to the coverage.