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The Wall Street S&P 500 benchmark hit another all-time high and commodities met Thursday after the U.S. government reported the strongest growth rate during the first three months of the year since 1984.
The 0.7% increase in the S&P 500 stock index placed it above the record close reached just two days ago, extending the year-round rally.
Strong U.S. economic growth data also caused the cost of raw materials to rise sharply. Copper was trading on the London Metal Exchange above $ 10,000 per tonne, levels not seen since 2011. Brent crude, the international marker for oil, gained 1.9% to 68.56 dollars a barrel.
According to data from the U.S. Department of Commerce released Thursday, the U.S. economy grew an annualized rate of 6.4 percent in the first quarter, exceeding the forecasts of economists surveyed by Reuters, who had predicted a gain of 6.1%.
In addition to being the strongest first quarter in nearly 40 years, it was the second-fastest growth in the United States since 2003.
The data showed that the economy was boosted by government action, driven by billions of dollars in federal stimulus spending, and that the nation’s central bank continued to indicate that it will maintain significant monetary policy support. .
The Federal Reserve said on Wednesday that indicators of economic activity and employment had strengthened, but continued labor market fragility made it too early to withdraw its $ 120 billion monthly bond purchases that have driven the financial markets throughout the pandemic.
Technology stocks have lagged behind in other sectors, with a highly technological Nasdaq Composite index rising only 0.2% to its all-time high, as rising Treasury yields removed the heat from valuations. of growing companies.
The ten-year US Treasury yield rose 0.03 percentage points to 1.64% as the price of debt declined. Rapid economic growth in the United States has fueled bets on higher inflation, which erodes fixed-yield bond yields.
Yields over 10 years also tend to punish long-term growth stocks, such as tech companies, by increasing the opportunity cost of owning shares in companies that don’t pay generous dividends.
Apple recorded quarterly double-digit sales growth in a earnings report released after the New York trade closed on Wednesday, while Facebook reported an increase in advertising revenue.
Shamik Dhar, BNY Mellon’s chief global economist, warned that while these first-quarter performances were strong, he did not expect technology stocks to continue to rise as global economies reopened from blockades and investors they moved away from the winners of the pandemic.
“You may see the technology indices supported for a while, but basically the story is the one that supports cyclical companies,” Dhar said, referring to companies as energy producers and manufacturers whose fortunes are linked to economic growth.
The dollar index, which measures the currency against those of trading partners, was trading at a flat level, around its weakest level since early March.
The pound was up 0.1% against the dollar to a level below the $ 1.40 level it last hit in early March.
With the U.S. recovery, traders were looking forward to economic progress driven by the deployment of vaccines in regions that have been slower to emerge from the pandemic, such as Europe, said Kristen Macleod, co-head of foreign exchange sales Barclays World Cup.
“The dollar tends to perform well when the United States is by far the leader in global growth,” he said.
On Thursday, the euro was flat against the dollar, at $ 1.2128, but gained 3.3% against the green dollar so far this month. “It’s not that Europe is going to roar ahead, it’s that it’s realized that people have become too bearish,” Macleod said.
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