NEW YORK (Reuters) – The S&P 500 and Dow Jones industrial average hit all-time highs on Tuesday as cyclical sectors gained more fiscal support to lift the US economy out of a coronavirus crisis.
However, the Nasdaq declined as technology stocks declined.
Sectors prepared to benefit most from a reopening of the economy, including energy and finance, had the biggest gains. President Joe Biden has launched a $ 1.9 trillion pandemic emergency bill and is pressuring Congress to pass it in the coming weeks to receive $ 1,400 in stimulus checks for Americans and increase unemployment payments.
The S&P 500 bank index rose 3.2% as the 10-year yield on the US Treasury reached its highest level since February 2020.
“Reflation trading continues to push stock markets across all industries and multi-caps … and this rally could continue in the short term,” said Tony Bedikian, head of global markets at Citizens Bank in Boston.
On the other hand, utilities and real estate recorded the highest percentage losses in the S&P 500 sectors, and technology stocks also declined. Utilities and real estate, due to their constant earnings and high dividend yields, are often considered bond prosecutors and tend to move in tandem with treasuries.
The technology sector includes many stocks with high earnings multiples, which may also be under pressure with rising yields, according to market analysts.
The S&P 500 retreated from session highs as yields rose on Tuesday, reflecting investor concerns about the day-to-day rise in bond yields, said Robert Phipps, director of Per Stirling Capital Management in Austin, Texas. The stock would probably tolerate a gradual rise in rates, but a higher sprint could create turbulence, in his opinion.
“Even if 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 decline in new coronavirus infections, progress in vaccinations and a stronger-than-expected earnings season in the fourth quarter have boosted hopes of a quick recovery in the business 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 closely monitored for signs of rising global travel demand.
Shares of cryptocurrencies and blockchain-related companies, including Silvergate Capital Corp., Riot Blockchain and Marathon Patent Group, rose between 8% and 21% as bitcoin briefly rose above $ 50,000.
Investors will also focus this week on the minutes of the January meeting of the Federal Reserve, where it reaffirmed its commitment to maintaining a balanced political stance.
Advanced issues outperformed the low number on the NYSE by a ratio of 1.04 to 1; on the Nasdaq, a 1.17 to 1 ratio favored the forwards.
The S&P 500 recorded 75 new highs of 52 weeks and no new lows; Nasdaq Composite recorded 363 new highs and nine new lows.
April Joyner’s Report; Additional reporting by Devik Jain and Shreyashi Sanyal in Bengaluru; Editing by Saumyadeb Chakrabarty and Cynthia Osterman