S&P 500 Extends Winning Streak

By Anna Isaac and David Benoit

U.S. stocks set fresh records again Wednesday, buoyed by more data pointing to an economic recovery and a continued rally in technology shares.

The S&P 500 index climbed 35.11 points, or 1%, to 3478.73, notching a fourth-straight record close after bouncing back from its March lows.

The Nasdaq Composite also extended its recent record streak, marking five straight with a gain of 198.59 points, or 1.7%, to 11665.06. The technology stocks that dominate the index followed soon-to-be Dow component Salesforce.com higher.

The Dow Jones Industrial Average climbed 83.48 points, or 0.3%, to 28331.92. The blue-chip index is still more than 4% below February's high.

The market is benefiting from reduced volatility, improving economic data and the belief central banks will keep taking steps that ultimately make buying stocks more appealing.

Volatility in U.S. stocks has been muted through much of August, with many investors and traders taking summer vacations in the U.S. and Europe. Still, markets have continued churning higher.

Investors have grown confident that the Federal Reserve and other central banks will continue to bolster the economy by holding short-term interest rates low and buying government bonds and other forms of debt. On Thursday, Fed Chairman Jerome Powell is speaking at the annual Jackson Hole Economic Policy Symposium and investors are betting he will signal that will continue.

Data on Wednesday showed orders for durable goods in the U.S. surged 11.2% in July, more than double the expected gain. Orders for defense aircraft and motor vehicles drove the spending higher, but even without those volatile categories the figures exceeded forecasts.

Stats like that will likely feed investors who are confident the recovery is continuing, said Tobias Levkovich, the head U.S. equity strategist at Citigroup.

Earlier in the week, he bumped higher his dour target for the S&P 500 for the year, saying central bank support and investor appetite made it more likely stocks would remain elevated, even if there are questions about the health of the economy. He cautioned the data is still coming off lows, but said investors are paying closer attention to acceleration.

"The markets are following momentum right now because it is a sign of progress," he said. "But at some point we have to look at the absolute levels."

He's started calling it FOMU -- the fear of meaningfully underperforming.

The central bank activity and investor belief is pushing yields on sovereign debt, considered among the safest assets to own, below expected inflation levels.

In bond markets, the yield on the benchmark 10-year U.S. Treasury note edged up for a third day, another sign that investors' risk appetite is improving. It rose to 0.686%, from 0.680% Tuesday.

"There's still trillions of dollars on the sidelines in money-market funds. It needs to be deployed and the only real home for it is equities, " said Edward Park, deputy chief investment officer at Brooks Macdonald.

Fixed income markets have been positioning for potential changes to monetary policy, as Mr. Powell is expected to signal shifts to the central bank's approach to managing inflation.

"The market is braced for shifts in the monetary policy regime," said Diana Amoa, a fixed-income fund manager at JPMorgan Asset Management. She said a confirmation of that change could still lead to a knee-jerk reaction that steepens the yield curve and brings in overseas buyers who have battled negative rates.

Investors are also watching the progress of Hurricane Laura as it gathers strength and churns toward Texas and Louisiana likely making landfall overnight. It has strengthened to a Category 4 storm and is forecast to produce a life-threatening storm surge, extreme winds and flash flooding.

Brent crude, the international oil benchmark, fell 0.5% to $45.64 a barrel. Stockpiles of fuel are high due to the pandemic's impact on demand, potentially minimizing the disruption on energy prices from the storms.

The energy and utility sectors in the S&P 500 both declined. Baker Hughes shares fell 60 cents, or 3.8%, to $15.05 and Hess dropped $2.02, or 4.2%, to $46.30. Weighing on the Dow, Chevron lost $1.35, or 1.6%, to $84.78 and Exxon Mobil fell 87 cents, or 2.1%, to $40.01.

Tech stocks were once again driving the market higher.

Shares of Salesforce jumped $56.27, or 26%, to $272.32. The business-software provider posted record quarterly sales and raised its guidance after the closing bell on Tuesday, showcasing the sustained appetite for cloud-computing services during the pandemic. The company will be added to the Dow Jones Industrial Average at the start of trading Monday.

The stocks that have led the way for much of the year were rallying again as well. Netflix climbed $56.95, or 12%, to $547.53, its biggest gain in three years, while Facebook rose $23.09, or 8.2%, to $303.91.

Shares of Dick's Sporting Goods climbed $7.32, or 16%, to $53.99 after the retailer said its e-commerce sales nearly tripled in the quarter ended Aug. 1, more than doubling its profit from a year ago.

One of the year's darlings, Moderna rose $4.25, or 6.4%, to $70.50 after disclosing it had new data on its experimental coronavirus vaccine that showed promising signs for older patients. The stock is up 260% this year.

Write to Anna Isaac at [e-mail] and David Benoit at [e-mail]