(Reuters) – U.S. technology shares rose on Thursday on optimism around a speedy economic recovery, although the Federal Reserve’s unexpectedly hawkish message on monetary policy kept the S&P 500 and the Dow indexes subdued.
Eight of the 11 S&P indexes were down in morning trade, while information technology was among the few gainers on the day.
Chipmaker Nvidia Corp jumped 4.8% to lead gains among the technology behemoths after Jefferies raised its price target on the stock.
Technology shares, which generally perform better when interest rates are low, powered a rally on Wall Street last year as investors flocked to stocks seen as relatively safe during times of economic turmoil.
The group has come under pressure this year on fears that rising inflation would lead the Fed to hike interest rates sooner than expected. The central bank on Wednesday moved its first projected rate increases from 2024 into 2023.
Still, shares of Apple Inc , Microsoft Corp, Amazon.com Inc and Facebook Inc reversed premarket declines to rise between 0.3% and 1.4% as investors bet that a steady economic rebound would boost demand for their products in the long run.
“The economy is growing significantly faster than the rate at which inflation is growing,” said Tom Mantione, managing director at UBS Private Wealth Management in Stamford, Connecticut.
“That, coupled with the reopening momentum, is quite supportive for stocks and we see the wider mega technology area performing better in the long term and have steady investor interest.”
At 10:32 a.m. ET, the technology-heavy Nasdaq Composite was up 0.69%, while the blue-chip Dow Jones Industrial Average was down 0.46% and the S&P 500 was flat.
Interest rate-sensitive bank stocks gave up early gains to drop 1.8%.
Other economically sensitive stocks including materials and energy fell more than 1.5% as data showed the jobless claims rising last week for the first time in more than a month. Still, layoffs appeared to be easing amid a reopening economy and a shortage of people willing to work.
In corporate news, U.S.-listed shares of CureVac NV sank 43% after the German biotech said its COVID-19 vaccine was 47% effective in a late-stage trial, missing the study’s main goal.
Ford Motor Co slipped 0.4% even as it said an improvement in its automotive business would help it post second-quarter adjusted operating earnings above its expectations.
Declining issues outnumbered advancers for a 1.98-to-1 ratio on the NYSE, while advancing issues outnumbered decliners by a 1.06-to-1 ratio on the Nasdaq.
The S&P index recorded 13 new 52-week highs and two new lows, while the Nasdaq recorded 55 new highs and 17 new lows.
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