S&P 500 Hits Record as Optimism About Economy Rises: Live Updates

Wall Street’s rally stretched into a third day on Thursday, with the S&P 500 reaching a record high, as investors stopped worrying about inflation and rising interest rates and focused instead on what looks to be an increasingly peppy economic recovery.

The S&P 500 rose 1 percent, climbing above its Feb. 12 closing high, while the technology-heavy Nasdaq composite jumped more than 2.5 percent, amid encouraging updates on the rollout of vaccines and reopening of the economy.

Over the last month, the outlook for the economy has brightened quickly, as the vaccine rollout has picked up steam and the Biden administration pushed for, and enacted, a larger stimulus plan than many had expected.

Economist surveyed by Bloomberg now expect the economy to grow by 5.5 percent in 2021, up from expectations for a 4.1 percent growth rate just a month ago. If that 5.5 percent rate is achieved it would be the best year for the American economy since 1984.

“This is a reaction to a dramatically improving economic outlook,” Kristina Hooper, chief global market strategist at the investment management firm Invesco, said of the market rally. “This is a just a very visceral reaction to an improvement in the timeline for vaccine distribution and the prospects for a very robust reopening.”

Companies that will benefit from the speedy rollout of vaccines and reopening of the economy rose on Thursday. The Russell 2000 index of small stocks, closely tied to the near-term outlook for the economy, rose more than 2 percent.

Energy and raw materials firms also posted gains. Oil futures rose. West Texas Intermediate crude, the U.S. benchmark, gained 2.5 percent, to about $66 a barrel.

It also helped that bond yields, whose rise has been a recent worry for the market, were stable on Thursday.

The yield on 10-Year Treasury notes held steady at 1.53 percent. In recent weeks, stocks stumbled as the yield jumped above 1.6 percent, its highest level in a year.

Rising bond yields can be a problem for stocks for a number of reasons.

Bond yields are the basis for most borrowing costs for consumers and companies, so when they go up, they can slow economic growth, hurt corporate profits and make owning stocks slightly less attractive.

And because yields are essentially the interest payments that bond investors collect, higher yields make owning bonds more attractive compared to stocks. Their rise can siphon money from the stock market.

Valuations of technology firms — especially those with high prices relative to the prospect for profits in the coming years — are also especially sensitive to interest rates. And the increase in rates has weighed heavily on tech in recent weeks.

But tech stocks have bounced back sharply this week. Tesla, Elon Musk’s electric car company, rose 4.7 percent on Thursday.

Other large technology firms that exert a large influence on market capitalization weighted indexes such as the S&P 500 also jumped on Thursday. Microsoft, Alphabet, Amazon and Apple were all higher.

The Labor Department announced two moves on Thursday to reverse rules issued under the Trump administration that narrowed the protection of federal law for millions of workers.

One of the rules was likely to have deemed millions of workers in industries like construction and transportation — many of them gig workers — to be contractors rather than employees.

The department had finalized the rule in January, two weeks before President Biden’s inauguration. But the Biden administration has delayed the rule’s effective date until May, a step toward rescinding it. The rule would probably have made workers like Uber drivers ineligible for the federal minimum wage and overtime pay, which apply only to employees.

Industry officials have estimated that treating gig workers as employees can raise labor costs by 20 to 30 percent, and Uber and other gig companies have fought on multiple fronts over the years to classify workers as contractors.

In November, voters in California approved a ballot initiative freeing gig companies from a state law that had effectively required them to treat workers as employees, a campaign in which Uber, Lyft and DoorDash invested tens of millions of dollars. Mr. Biden opposed the effort to scale back the law, though some prominent supporters and advisers to him and Vice President Kamala Harris have ties to the gig companies.

In its proposal to rescind the Trump rule, the Labor Department said the rule had improperly narrowed the list of factors that…