Thursday, May 27, 2021 09:14 AM
  • Jobless claims fell last week to a fresh pandemic low
  • Orders for U.S. business equipment rose more than forecast

Stocks climbed after strong economic reports spurred a rally in companies that stand to benefit the most from a rebound in activity. Treasuries fell, while the dollar was little changed.

Industrial, commodity and financial shares led gains in the S&P 500, the Russell 2000 of small caps outperformed major U.S. equity benchmarks, while the tech-heavy Nasdaq 100 fluctuated. Equities also rose after a news report that President Joe Biden will unveil a budget that would see federal spending jump to $6 trillion in the coming fiscal year. Banks remained in focus as the chief executive officers of the largest lenders testify again before Congress.

Equities headed toward their fourth straight monthly rally as prospects for an economic rebound tempered anxiety over higher inflation. Data Thursday showed that U.S. jobless claims dropped to a fresh pandemic low, while orders for business equipment climbed more than forecast, marking yet another robust month of capital investment. Pending home sales fell unexpectedly, but analysts highlighted the underlying buyer interest that could translate into a pickup in contract signings.

“We’re seeing that kind of economic data underscore what we keep calling the recovery trade — a move back into cyclical and defensive stocks, companies that are poised to do better with a reopening of the economy,” said Greg Bassuk, chief executive officer at AXS Investments. “Value has a much stronger path for gains going forward.”