Stocks extend rally in the final hour as the S&P 500 heads for a record closing high

Stocks rose sharply on Wednesday, putting Wall Street on pace for a record day, as shares of the major tech companies recovered some of their steep losses from the previous session. 

The S&P 500 gained 1.6% to trade above its old record closing high of 3,386.15. The broader market index was also just 0.2% below its intraday all-time high of 3,393.52.

The Dow Jones Industrial Average traded 340 points higher, or 1.2%. The Nasdaq Composite outperformed, rising 2.2%.

Facebook, Amazon and Netflix were all up at least 1.9% while Alphabet advanced 2%. Microsoft and Apple gained more than 3% each.

Stocks that would benefit from the economy reopening lagged, however. Cruise operator Carnival dropped more than 4%. JPMorgan Chase, Bank of America and Citigroup were all lower. 

“There’s a big debate happening in the market right now,” said Yousef Abbasi, global market strategist at StoneX. “Does the tech outperformance continue? Or does hope around a vaccine, a better-than-expected Q2 earnings season and the hope the strong economic data continues to hold up start to justify the idea that some froth should probably come out of tech?”

Abbasi noted the financials sector is one space where investors have “some interesting levers they can pull to actually generate decent performance, particularly if you believe the economy will continue to recover.”

Sentiment was also lifted in part by President Donald Trump saying late Tuesday that the U.S. government will purchase 100 million doses of Moderna’s experimental coronavirus vaccine, which is currently in late-stage human trials.

Shares of Facebook, Amazon, Apple, Netflix, Alphabet and Microsoft all dropped sharply on Tuesday, thwarting the S&P 500’s march to its Feb. 19 record high. 

Financials was the index’s only sector negative for the day.

“A combination of the S&P 500 Index making its first real attempt at an all-time record high after seven straight days of advances, its old leadership — technology and FAANGs — continuing a recent trend of struggling and another day without an agreement nor even renewed talks in DC regarding a new stimulus package finally caught up with the stock market,” Jim Paulsen, chief investment strategist at the Leuthold Group, told CNBC. “The first signs of trouble today brought a lot of selling by investors anxious to lock-in recent gains.”

Investors also juggled uncertainty over a second coronavirus stimulus bill. Over the weekend, Trump signed four executive orders to extend some coronavirus aid.

Treasury Secretary Steven Mnuchin said Monday the White House is open to resuming coronavirus aid talks with Democrats and putting more relief money on the table to reach a compromise.

On Wednesday, House Speaker Nancy Pelosi said both sides were still “miles apart” on relief negotiations. The major averages gave back some of their gains following the news. 

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