By Yasin Ebrahim – The S&P 500 and Nasdaq closed at record highs riding a wave of economic optimism as President Joe Biden announced a nearly $600 billion infrastructure pact, the fate of which depends on the success of a much larger package that has drawn strong opposition from Republicans. 

The S&P 500 rose 0.6% to record intraday high of 4,266.50 and the Dow Jones Industrial Average jumped 1%, or 322 points, while the Nasdaq climbed 0.7% having hit an all-time high of 14,369.71 intraday.

“We have a deal,” Biden told reporters Thursday. “I think it’s really important we’ve all agreed that none of us got all that we wanted.”

The deal didn’t include the more ambitious initiatives including spending to expand child care and education and was much lower than the $2.3 trillion package touted by Biden earlier this year. The infrastructure bill will only be passed alongside a much larger package — expected to be funded by tax hikes — that would focus spending on “human infrastructure," according to Biden. The much larger infrastructure package has a narrow window of passage in Congress through the reconciliation process without the support of Republicans. There isn't much room for error as Democrats hold a slender majority.  

Ahead of the announcement House speaker Nancy Pelosi said she wouldn't introduce the infrastructure bill until the second larger bill was prepared.

The upgrade to critical infrastructure is widely expected to boost productivity and ultimately economic growth.

Cyclical areas of the market, which benefit from stronger economic growth, added to gains with financials leading to the upside.

Financials were also helped by a jump in banking stocks ahead of the Federal Reserve's stress test results due later Thursday, which could pave the way for a massive wave of capital return to shareholders.

JPMorgan Chase&Co (NYSE:JPM), Goldman Sachs Inc (NYSE:GS) and Wells Fargo &Company (NYSE:WFC), with the latter up nearly 3%.

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Tech, meanwhile, was helped by a bid up in chip stocks even as some warn there isn't any light at the end of the tunnel just yet for the supply shortage in chips. Flex, the world’s third-biggest chipmaker, said the lack of supply is likely to last until at least mid-2022.

With the exception of Apple (NASDAQ:AAPL) and (NASDAQ:AMZN), megacap tech was mostly up with Microsoft adding to its $2 trillion market cap. 

Microsoft (NASDAQ:MSFT, Facebook (NASDAQ:FB), and Google-parent Alphabet (NASDAQ:GOOGL) closed higher. 

The record day on Wall Street was driven by a broad rally with most sectors – baring real estate and utilities – racking up gains. But this is an aberration from the ongoing rotation into value from growth or vice versa. This rotation doesn't point to a market that sees plenty of room for upside.  

"While the S&P 500 has drifted to new highs, this market has felt less overwhelmingly bullish and more rotational," Chief Market Strategist David Keller at told in an interview on Thursday. "So I think the last couple of months have been certainly rotational … which is probably more a sign of a topping market than a healthy bull market." 

Still, the current technicals for the broader market are in place for the rally to continue at least in the short term. 

In the coming weeks, if the S&P 500 holds above its "50-day moving average, which is currently around 4,190 on the S&P 500, and previous lows from earlier this month in June which are around 4,160 or 4,170, I think we're in good shape," Keller added. "But if we start to break those support levels, then the character of the market can change very, very quickly once people start to see things roll over."

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