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.
To many, Tatu City on the outskirts of Nairobi looks like a success. The first city entirely built by a private company to be operational in east Africa, with about 25,000 people living and working there, it accounts for about two-thirds of all foreign investment in Kenya. Its low-tax status has attracted more than 100 businesses including Heineken, coffee brand Dormans, and the biggest call-center and cold-chain transport firms in the region. However, to some local politicians, Tatu City has looked more like a target for extortion. A parade of governors have demanded land worth millions of dollars in exchange
An Indonesian animated movie is smashing regional box office records and could be set for wider success as it prepares to open beyond the Southeast Asian archipelago’s silver screens. Jumbo — a film based on the adventures of main character, Don, a large orphaned Indonesian boy facing bullying at school — last month became the highest-grossing Southeast Asian animated film, raking in more than US$8 million. Released at the end of March to coincide with the Eid holidays after the Islamic fasting month of Ramadan, the movie has hit 8 million ticket sales, the third-highest in Indonesian cinema history, Film
Taiwan Semiconductor Manufacturing Co’s (TSMC, 台積電) revenue jumped 48 percent last month, underscoring how electronics firms scrambled to acquire essential components before global tariffs took effect. The main chipmaker for Apple Inc and Nvidia Corp reported monthly sales of NT$349.6 billion (US$11.6 billion). That compares with the average analysts’ estimate for a 38 percent rise in second-quarter revenue. US President Donald Trump’s trade war is prompting economists to retool GDP forecasts worldwide, casting doubt over the outlook for everything from iPhone demand to computing and datacenter construction. However, TSMC — a barometer for global tech spending given its central role in the
Alchip Technologies Ltd (世芯), an application-specific integrated circuit (ASIC) designer specializing in server chips, expects revenue to decline this year due to sagging demand for 5-nanometer artificial intelligence (AI) chips from a North America-based major customer, a company executive said yesterday. That would be the first contraction in revenue for Alchip as it has been enjoying strong revenue growth over the past few years, benefiting from cloud-service providers’ moves to reduce dependence on Nvidia Corp’s expensive AI chips by building their own AI accelerator by outsourcing chip design. The 5-nanometer chip was supposed to be a new growth engine as the lifecycle
RSS