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* Ulta Beauty collapses as revenue forecasts disappoint
* The yield on 10-year benchmark bonds reaches its highest level in a year
* Nasdaq and S&P 500 post best week out of five (adds 4 p.m. close)
NEW YORK, March 12 (Reuters) – The blue chip Dow hit its fifth straight record on Friday as investors bought stocks that are expected to benefit from a strong reopening of the US economy, a prospect signaled by rising yields in the bond market.
The high-tech Nasdaq fell after rebounding more than 6% in the last three sessions and the S&P 500 closed after hitting an all-time high the previous session as rising Treasury yields rekindled fears inflation.
The Nasdaq and S&P 500 posted their best week in five after President Joe Biden enacted one of the biggest U.S. fiscal stimulus bills on Thursday and data bolstered by beliefs the economy was heading for. a strong growth recovery.
The recent rise in yields on US Treasuries raised fears of a sudden reduction in monetary stimulus and put downward pressure on Wall Street in recent weeks.
The yield on the benchmark 10-year note hit 1.642% on Friday, the highest level since February of last year.
The rise in the Dow Jones and the fall in the Nasdaq reflect a continued sell-off in technology as investors buy cyclical and undervalued value stocks that are expected to do well as the economy recovers.
For tech stocks to continue to thrive, low rates and, in fact, slower growth are needed, said Thomas Hayes, chairman and managing member of hedge fund Great Hill Capital LLC.
But with the stimulus package, the economy is likely to grow 7% to 9% this year and put pressure on interest rates, he said.
“That’s why you see rates going up today because the reopening is happening faster and stronger than you expected. And that’s when value and cyclical and economically sensitive stocks outperform, ”said Hayes.
The rapid distribution of vaccines and increased tax assistance have raised concerns about rising inflation despite assurances from the Federal Reserve to maintain an accommodative policy. All eyes will be on the central bank policy meeting next week for further hints on inflation.
US consumer sentiment improved in early March to its highest level in a year, a University of Michigan survey showed on Friday.
Unofficially, the Dow Jones Industrial Average rose 291.74 points, or 0.9%, to 32,777.33, the S&P 500 gained 3.98 points, or 0.10%, to 3,943.32 and the Nasdaq Composite fell 78.81 points, or 0.59%, to 13,319.87.
The Nasdaq has been particularly hit by the sell-off in recent weeks and confirmed a correction earlier in the week as investors traded richly valued tech stocks with those of energy, mining and industrials companies that should benefit more from a rebound. economic. .
Value stocks rose while growth stocks collapsed as part of a rotation that began late last year.
The high-flying but performance-sensitive equity group including Facebook Inc, Apple Inc, Amazon.com Inc, Netflix Inc, Google-parent Alphabet Inc, Tesla Inc and Microsoft Corp, which fueled last year’s rally , dropped.
Technology, communications services and consumer discretionary indices, which house these mega-cap stocks, have slipped the most among the S&P’s major sectors.
The banking index surged, while finance and industry hit new record highs.
Ulta Beauty Inc fell after the cosmetics retailer forecast lower-than-estimated annual revenue with demand for makeup products under pressure due to extended work-from-home policies.
U.S.-listed shares of Chinese firm JD.com Inc slipped after three sources said it was in talks to buy part or all of a stake in brokerage firm Sinolink Securities from a worth at least $ 1.5 billion.
Reporting by Herbert Lash in New York Additional reporting by Medha Singh, Shashank Nayar and Sagarika Jaisinghani in Bengaluru Editing by Maju Samuel and Matthew Lewis
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