NEW YORK, RAW – The blue-chip Dow has powered to its fifth consecutive record high and the S&P 500 closed has slightly higher as investors bought shares that should benefit from a strong reopening of the US economy, an outlook signalled by rising yields in the bond market.
The tech-heavy Nasdaq tumbled on Friday after rebounding more than six per cent in the past three sessions as the rising bond yields revived inflation worries and dulled the appeal of high-growth technology shares.
The S&P 500 and Nasdaq posted their biggest weekly percentage gains since early February after President Joe Biden signed into law on Thursday one of the largest US fiscal stimulus bills and data reinforced convictions the economy was headed to a high-growth recovery.
The recent rise in US Treasury yields has raised fears of a sudden tapering of monetary stimulus and put downward pressure on Wall Street in recent weeks.
The yield on the benchmark 10-year note hit 1.642 per cent on Friday, the highest level since February of last year.
Boeing Co rose 6.82 per cent to lead the Dow and S&P 500 higher. The rising Dow and tumbling Nasdaq reflect an ongoing sell-off in tech as investors buy cyclical and underpriced value stocks that are expected to do well as the economy recovers.
The speedy distribution of vaccines and more fiscal aid have spurred concerns of rising inflation despite assurances from the Federal Reserve to maintain an accommodative policy. All eyes will be on the central bank’s policy meeting next week.
US consumer sentiment improved in early March to its strongest in a year, a survey by the University of Michigan showed on Friday.
The Dow Jones Industrial Average rose 293.05 points, or 0.9 per cent, to close at 32,778.64 and the S&P 500 gained 4 points, or 0.10 per cent, to 3,943.34. The Nasdaq Composite dropped 78.81 points, or 0.59 per cent, to end at 13,319.87.
For the week, the S&P rose 2.6 per cent, the Dow added 4.1 per cent and the Nasdaq gained 3.1 per cent. For the Dow it was its biggest weekly gain since November.
Volume on US exchanges was 11.64 billion shares.
The Nasdaq has been particularly hit by the recent sell-off and confirmed a correction at the start of the week as investors swapped richly valued technology stocks with those of energy, mining and industrial companies that are poised to benefit more from an economic rebound.
The high-flying but yield-sensitive group of stocks including of Facebook Inc, Apple Inc, Amazon.com Inc, Netflix Inc, Google-parent Alphabet Inc , Tesla Inc and Microsoft Corp, which fuelled the past’s year rally, fell.
Advancing issues outnumbered declining ones on the NYSE by a 1.24-to-1 ratio; on Nasdaq, a 1.14-to-1 ratio favoured advancers.
The S&P 500 posted 83 new 52-week highs and no new lows; the Nasdaq Composite recorded 396 new highs and 12 new lows.