Dow Jones And S&P 500 Close At Record Highs As Service Sector Rebounds

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Topline

Stocks rallied to fresh peaks Monday as the economy showed signs of recovery from the coronavirus pandemic, including in the hard-hit services sector that accounts for two-thirds of gross domestic product in the U.S.

Key Facts

The Dow Jones Industrial Average rose 1.1% to a record 33,527, while the S&P 500 was up 1.4% to a record 4,077.

The technology-heavy Nasdaq Composite gained 1.7% to close at 13,705.

The increases came after a key measure of the U.S. services activity rose to the highest level on record in March, raising hopes that the sector could rebound faster than expected from the deep losses caused by Covid-19 restrictions over the past year. 

Investors were also optimistic following the U.S. jobs report released Friday, which showed a sharp acceleration in hiring last month.

Key Background

The Institute for Supply Management said early Monday its non-manufacturing index jumped to 63.7 last month from 55.3 in February, compared with economist expectations for a reading of 59.2. A reading above 50 signals expansion in the services sector, which includes a wide range of industries from construction to entertainment. Since the market was closed on Friday, this was the first chance for investors to react to the Labor Department report that U.S. employers added 916,000 jobs last month, the largest increase since August. Travel industry companies were among the strongest performers, with the three major U.S. airlines up between 2% and 3% each. The cruise operators Norwegian Cruise Lines and Carnival rose as much as 7%. Energy company shares fell as a rise in Covid-19 cases around the world threatened to weigh on the global economy and after OPEC and Russia announced oil production increases.