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.
SECOND-RATE: Models distilled from US products do not perform the same as the original and undo measures that ensure the systems are neutral, the US’ cable said The US Department of State has ordered a global push to bring attention to what it said are widespread efforts by Chinese companies, including artificial intelligence (AI) start-up DeepSeek (深度求索), to steal intellectual property from US AI labs, according to a diplomatic cable. The cable, dated Friday and sent to diplomatic and consular posts around the world, instructs diplomatic staff to speak to their foreign counterparts about “concerns over adversaries’ extraction and distillation of US AI models.” Distillation is the process of training smaller AI models using output from larger, more expensive ones to lower the costs of training a powerful new
Shares of Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) have repeatedly hit new highs, but an equity analyst said the stock’s valuation remains within a reasonable range and any pullback would likely be technical. The contract chipmaker’s historical price-to-earnings (P/E) ratio has ranged between 20 and 30, Cathay Futures Consultant Co (國泰證期) analyst Tsai Ming-han (蔡明翰) told Central News Agency. With market consensus projecting that TSMC would post earnings per share of about NT$100 (US$3.17) this year, supported by strong global demand for artificial intelligence (AI) applications, and the stock currently trading at a P/E ratio of below 25, Tsai said the valuation
The artificial intelligence (AI) boom has triggered a seismic reshuffling of global equity markets, with Taiwan and South Korea muscling past European nations one by one. With its stock market now valued at nearly US$4.3 trillion, Taiwan surpassed the UK, Europe’s biggest market, earlier this month, data compiled by Bloomberg showed. South Korea is about US$140 billion away from doing the same. The tech-heavy Asian markets have shot past Germany and France in the past seven months. The shift is largely down to massive gains in shares of three companies that provide essential hardware for AI: Taiwan Semiconductor Manufacturing Co (TSMC, 台積電),
The US Department of Commerce last week ordered multiple chip equipment companies to halt shipments of certain tools to China’s second-largest chipmaker, Hua Hong Semiconductor Ltd (華虹半導體), its latest action to slow the country’s development of advanced chips, two people familiar with the matter said. The department sent letters to at least a handful of companies informing them of restrictions on tools and other materials destined for two Hua Hong facilities US officials believe make China’s most sophisticated chips, the people said. Top US chip equipment companies Lam Research Corp, Applied Materials Inc and KLA Corp, each of which has significant
RSS