The S&P 500 and NASDAQ set record closing highs on Friday as investors bought energy, financial and materials shares and sold big tech stocks in anticipation of new fiscal aid from Washington to help the US economy recover.
The major indices traded in a tight range during the week in which investors rotated out of growth-oriented stocks that have dominated an almost year-long rally and bought cyclical and under-priced value stocks.
The S&P energy, financials and materials sectors rose on expectations they will benefit from a reopened economy, while heavyweights Apple Inc, Tesla Inc and Microsoft Corp were lower most of the session. All three closed higher in a late market surge.
Value and cyclicals outperform in a rising interest rate, higher-growth environment, which the US economy is on the cusp of entering, said Thomas Hayes, chairman and managing member of hedge fund Great Hill Capital LLC in New York.
“We’re underestimating the lag effect of all the money in the system as more and more vaccinations are delivered and as more of the country reopens” from business shutdowns, he said.
“We are continuing this rotation that would be consistent with the new business cycle, and as [bond] yields go up, value and cyclicals will lead,” Hayes said.
The Cboe Volatility Index, Wall Street’s so-called fear gauge, closed below 20 for the first time since February last year.
A sharp drop in new COVID-19 cases and hospitalizations in recent weeks have helped drive markets to new highs, though a near-term pullback could occur from the new coronavirus variants and potential snags in vaccine distributions.
The latest data showed US consumer sentiment unexpectedly fell early this month as households were still worried about the economy despite expectations for additional stimulus.
A Reuters poll showed the US economy is expected to reach pre-COVID-19 levels within a year as the proposed US$1.9 trillion fiscal bill helps boost economic activity, but employment will likely take more than a year to fully recover.
US President Joe Biden turned to a bipartisan group of local officials for support on his US$1.9 trillion coronavirus relief plan to help millions of unemployed workers and for schools to reopen.
The Lipper data late on Thursday showed US-based stock funds attracted US$22.9 billion in the week to Wednesday, the largest weekly inflow since March 2008.
US stock markets will be closed tomorrow for the Presidents Day holiday.
The S&P 500 set hit an all-time peak on Friday, while the NASDAQ and Dow did earlier in the week
The Dow Jones Industrial Average rose 27.7 points, or 0.09 percent, to 31,458.4, the S&P 500 gained 18.45 points, or 0.47 percent, to 3,934.83 and the NASDAQ Composite added 69.70 points, or 0.5 percent, to 14,095.47. Volume on US exchanges was 13.27 billion shares.
The small-cap index rose for the fifth week out of six full weeks this year. PayPal Holdings Inc rose 4.7 percent after several brokerages raised their price targets following the payments company’s investor day call a day earlier.
Walt Disney Co reported a surprise quarterly profit. However, its shares fell 1.7 percent from a record high after a more than 13 percent run-up to its results over the last two weeks.
Dating app operator Bumble Inc jumped 7.3 percent, a day after a stellar debut sent its shares up more than 75 percent. Chief executive officer Whitney Wolfe Herd’s stake in the women-centric dating app operator was worth nearly US$2 billion.
Advancing issues outnumbered declining ones on the NYSE by a 1.35-to-1 ratio; on NASDAQ, a 1.22-to-1 ratio favored advancers.
The S&P 500 posted 52 new 52-week highs and no new lows; the NASDAQ Composite recorded 261 new highs and 17 new lows.
RECYCLE: Taiwan would aid manufacturers in refining rare earths from discarded appliances, which would fit the nation’s circular economy goals, minister Kung said Taiwan would work with the US and Japan on a proposed cooperation initiative in response to Beijing’s newly announced rare earth export curbs, Minister of Economic Affairs Kung Ming-hsin (龔明鑫) said yesterday. China last week announced new restrictions requiring companies to obtain export licenses if their products contain more than 0.1 percent of Chinese-origin rare earths by value. US Secretary of the Treasury Scott Bessent on Wednesday responded by saying that Beijing was “unreliable” in its rare earths exports, adding that the US would “neither be commanded, nor controlled” by China, several media outlets reported. Japanese Minister of Finance Katsunobu Kato yesterday also
Taiwan’s rapidly aging population is fueling a sharp increase in homes occupied solely by elderly people, a trend that is reshaping the nation’s housing market and social fabric, real-estate brokers said yesterday. About 850,000 residences were occupied by elderly people in the first quarter, including 655,000 that housed only one resident, the Ministry of the Interior said. The figures have nearly doubled from a decade earlier, Great Home Realty Co (大家房屋) said, as people aged 65 and older now make up 20.8 percent of the population. “The so-called silver tsunami represents more than just a demographic shift — it could fundamentally redefine the
China Airlines Ltd (CAL, 中華航空) said it expects peak season effects in the fourth quarter to continue to boost demand for passenger flights and cargo services, after reporting its second-highest-ever September sales on Monday. The carrier said it posted NT$15.88 billion (US$517 million) in consolidated sales last month, trailing only September last year’s NT$16.01 billion. Last month, CAL generated NT$8.77 billion from its passenger flights and NT$5.37 billion from cargo services, it said. In the first nine months of this year, the carrier posted NT$154.93 billion in cumulative sales, up 2.62 percent from a year earlier, marking the second-highest level for the January-September
‘DRAMATIC AND POSITIVE’: AI growth would be better than it previously forecast and would stay robust even if the Chinese market became inaccessible for customers, it said Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) yesterday raised its full-year revenue growth outlook after posting record profit for last quarter, despite growing market concern about an artificial intelligence (AI) bubble. The company said it expects revenue to expand about 35 percent year-on-year, driven mainly by faster-than-expected demand for leading-edge chips for AI applications. The world’s biggest contract chipmaker in July projected that revenue this year would expand about 30 percent in US dollar terms. The company also slightly hiked its capital expenditure for this year to US$40 billion to US$42 billion, compared with US$38 billion to US$42 billion it set previously. “AI demand actually
RSS