NEW YORK (Reuters) – The S&P 500 and Dow Jones Industrial Average hit record highs on Tuesday as cyclical sectors gained on the prospect of more fiscal support to lift the US economy out of a coronavirus-driven slump.
However, the Nasdaq fell as technology stocks fell.
Sectors that would benefit the most from a reopening economy, including energy and finance, posted the greatest gains. President Joe Biden has introduced a $ 1.9 trillion pandemic bill and is urging Congress to pass it in the coming weeks so that Americans get $ 1,400 in stimulus vouchers and boost unemployment benefits.
The S&P 500 bank index jumped 3.2% when 10-year US Treasury yields hit their highest levels since February 2020.
“Reflation trading continues to drive stock markets across all industries and multi-caps … and this rally could continue in the near term,” said Tony Bedikian, head of global markets at Citizens Bank in Boston.
Conversely, utilities and real estate posted the largest percentage losses in the S&P 500 sectors, and technology stocks also declined. Utilities and real estate, due to their stable income and high dividend yields, are often considered bond proxies and tend to move with Treasury bills.
The technology sector includes many stocks with high earnings multiples, which some market analysts say could also come under pressure from rising returns.
The S&P 500 pulled back from session highs as returns rose Tuesday, reflecting investor concerns about the rise in bond yields for the day, said Robert Phipps, director at Per Stirling Capital Management in Austin, Texas. Stocks would likely tolerate a gradual rise in interest rates, but a higher sprint could create turbulence, he said.
“While interest rates are still very low, the stock market will be very, very sensitive to change,” he said.
The Dow Jones Industrial Average rose 97.56 points, or 0.31%, to 31,555.96, the S&P 500 gained 3.79 points or 0.10% to 3,938.62 and the Nasdaq Composite fell 25.65 points, or 0.18%, to 14,069.83.
A sharp drop in the number of new coronavirus infections, progress in vaccinations and a better-than-expected earnings season in the fourth quarter have bolstered hopes for a rapid business recovery this year.
This week’s earnings reports from Hilton Worldwide Holdings Inc, Hyatt Hotels Corp, Marriott International Inc, Norwegian Cruise Lines and TripAdvisor Inc will be watched closely for signs of a rebound in global travel demand.
Shares of cryptocurrency and blockchain-related companies, including Silvergate Capital Corp, Riot Blockchain, and Marathon Patent Group, shot between 8% and 21% when bitcoin briefly climbed past $ 50,000.
Investors this week will also focus on the minutes of the Federal Reserve’s January meeting, where it reaffirmed its commitment to maintain a moderate policy stance.
On the NYSE there were more problems than the decreasing problems with a ratio of 1.04 to 1; on Nasdaq, a ratio of 1.17 to 1 was in favor of progress.
The S&P 500 posted 75 new highs in 52 weeks and no new lows; the Nasdaq Composite registered 363 new highs and nine new lows.
Reporting by April Joyner; Additional reporting by Devik Jain and Shreyashi Sanyal in Bengaluru; Edited by Saumyadeb Chakrabarty and Cynthia Osterman