The S&P 500 and Nasdaq hit record highs on Monday as technology stocks jumped after the Federal Reserve's dovish comments eased fears of a sudden tapering in monetary stimulus and boosted optimism around an economic recovery.
High-growth tech stocks tend to benefit from expectations of lower rates because their value rests heavily on future earnings.is tracking its longest monthly winning streak since 2018 on the promise of easy money, with investors shrugging off signs of a slowing economic recovery and surging COVID-19 cases.
Fed Chair Jerome Powell said on Friday the central bank would continue to be cautious in its approach to tapering its massive pandemic-era stimulus, while reaffirming a steady economic recovery.
"Although, if the Fed continues to be so dovish in its policy meetings going ahead, markets might think that there are some problems brewing in the economic recovery process." The S&P 500 has risen 3.2% so far in August - a seasonally weak period for stocks - and Wells Fargo analysts said last week they expect the index to rise another 8% by the end of the year.
It is also on track to log one of its best year-to-date returns through August of the past six decades, said Chris Larkin, managing director, Trading at E*TRADE Financial.
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