Stocks on Wall Street has closed near break-even as investors sold technology shares that have rallied through the pandemic and rotated into cyclical stocks set to benefit from pent-up demand once the coronavirus pandemic is subdued.
Industrials led rising sectors in the S&P 500 on Friday, spurred by a 9.9 per cent surge in Deere & Co and Caterpillar’s 5.0 per cent gain to an all-time peak of $US211.40 a share. Financials, materials and energy, along with industrials, rose more than one per cent.
The S&P 1500 airlines index jumped 3.5 per cent, with post-pandemic travel in focus.
The stay-at-home winners, including Microsoft Corp, Facebook Inc, Alphabet’s Google and Netflix Inc, fell in a trend seen for most of the week. Amazon.com Inc also fell, as investors sold the leaders in the big rally since last March.
Value stocks rose 0.6 per cent while growth fell 0.6 per cent. Advancing stocks led declining shares by about a 2:1 ratio.
A battle continues between tech-led growth stocks and cyclicals, companies that are heavily affected by economic conditions, says Tim Ghriskey, chief investment strategist at Inverness Counsel in New York.
“When the economy is roaring, they’re roaring. When the economy is weakening, they’re weakening,” Ghriskey said of cyclicals. “The economy will roar, at least for a period of time. There’s huge pent-up demand, whether just for travel or going back to work.”
The Dow Jones Industrial Average edged up 0.98 points to 31,494.32 and the Nasdaq Composite added 9.11 points, or 0.07 per cent, to 13,874.46. The S&P 500 dropped 7.26 points, or 0.19 per cent, to 3,906.71.
Volume on US exchanges was 13.47 billion shares.
Strong earnings, progress in vaccination rollouts and hopes of a $US1.9 trillion federal coronavirus relief package helped US stock indices hit record highs at the start of the week.
The Dow hit a record intraday peak, led by Caterpillar, after Deere raised its 2021 earnings forecast. Deere reported profit more than doubled in the first quarter on rising demand for farm and construction machinery.
The benchmark S&P 500 and the tech-heavy Nasdaq posted their first weekly declines this month on concerns over higher stock market valuations, and expectations of rising inflation led to fears of a short-term pullback in equities.
For the week, the Dow rose 0.1 per cent while the S&P 500 fell 0.7 per cent and the Nasdaq slid 1.6 per cent.
Applied Materials Inc was among the top boosts to the Nasdaq and the S&P 500, rising 5.3 per cent to $US119.46 after it forecast second-quarter revenue above market expectations.
Advancing issues outnumbered declining ones on the NYSE by a 1.87-to-1 ratio; on Nasdaq, a 2.14-to-1 ratio favoured advancers.
The S&P 500 posted 51 new 52-week highs and no new lows; the Nasdaq Composite recorded 223 new highs and nine new lows.