NEW YORK CITY, RAW – The Nasdaq has climbed to a record-high close, fuelled by a rally in Tesla Inc, while the S&P 500 dipped even as investors cheered data that showed a record peak for US factory activity in June.
Gains in Nvidia Corp and Facebook Inc extended a recent rebound in top-shelf growth stocks that fell out of favour in recent months as investors focused on companies expected to do well when the economy recovers from the pandemic.
Data firm IHS Markit said its flash US manufacturing Purchasing Managers’ Index rose to a reading of 62.6 this month, beating estimates of 61.5, but manufacturers are still struggling to secure raw materials and qualified workers, substantially raising prices.
The “high level of today’s surveys will provide some confirmation for the Fed that the time to begin taking its foot off the accelerator is not far away,” said Jai Malhi, global market strategist at JP Morgan Asset Management.
On Tuesday, Fed Chair Jerome Powell reaffirmed the central bank’s intent not to raise interest rates too quickly based only on the fear of coming inflation.
Powell’s comments follow the Fed’s projection a week ago of an increase in interest rates as soon as 2023, sooner than anticipated.
Since then, growth stocks, including major tech names like Tesla and Nvidia, have mostly rallied and outperformed value stocks, like banks and materials companies.
“People are ploughing money into what has worked. People are basically momentum-chasing and they’re using the last three years of performance to figure out what to chase,” said Mike Zigmont, head of trading and research at Harvest Volatility Management in New York.
Eight of the 11 major S&P sector indexes fell, with utilities down about 1.0 per cent and leading the way lower, followed by a 0.6 per cent dip in materials.
Tesla jumped 5.3 per cent after the electric vehicle maker said it had opened a solar-powered charging station with on-site power storage in the Tibetan capital Lhasa, its first such facility in China.
That trimmed the stock’s loss in 2021 to about 7.0 per cent.
Extending investors’ recent preference for growth stocks, the S&P 500 growth index edged up 0.01 per cent while the value index dipped 0.24 per cent.
The Dow Jones Industrial Average fell 0.21 per cent to end at 33,874.24 points while the S&P 500 lost 0.11 per cent to 4,241.84 and the Nasdaq Composite climbed 0.13 per cent to 14,271.73.
The S&P 500 has gained about 13 per cent in 2021 while the Nasdaq and Dow are up about 11 per cent.
Nikola Corp rallied 4.3 per cent after the electric and hydrogen vehicle maker said it is investing $US50 million ($A66 million) in Wabash Valley Resources LLC to produce clean hydrogen in the US midwest for its zero-emission trucks.
Among so-called meme stocks, software firm Alfi Inc tumbled 26 per cent after more than doubling in value in the prior session while Torchlight Energy Resources Inc slumped 30 per cent, tumbling for a second day after announcing an upsized stock offering.
Advancing issues outnumbered declining ones on the NYSE by a 1.14-to-1 ratio; on Nasdaq, a 1.42-to-1 ratio favoured advancers.
The S&P 500 posted 33 new 52-week highs and no new lows; the Nasdaq Composite recorded 91 new highs and 28 new lows.
Volume on US exchanges was 9.3 billion shares compared with the 11.1 billion average over the last 20 trading days.