Rally rally drives S&P 500 and Dow to new highs

NEW YORK (Reuters) – The S&P 500 and the Dow Jones Industrial Average hit all-time highs on Tuesday as cyclical sectors gained in prospect of increased budget support to pull the US economy out of a coronavirus crisis.

The Nasdaq, however, fell as tech stocks retreated.

Sectors on the verge of benefiting the most from reopening the economy, including energy and finance, recorded the largest gains. President Joe Biden has introduced a $ 1.9 trillion pandemic relief bill and urges Congress to pass it in the coming weeks to secure $ 1,400 stimulus checks to Americans and strengthen unemployment payments.

The S&P 500 banking index jumped 3.2% as the yield on 10-year U.S. Treasuries hit its highest since February 2020.

“Reflation trading continues to push equity markets across all sectors and multi-caps … and this rally could continue in the near term,” said Tony Bedikian, head of global markets at Citizens Bank of Boston.

Conversely, utilities and real estate posted the largest percentage losses among the S&P 500 sectors, and technology stocks also fell. Utilities and real estate, due to their stable earnings and high dividend yields, are often viewed as bond agents and tend to move hand in hand with Treasuries.

The tech sector comprises many stocks with high earnings multiples, which can also be under pressure with rising returns, some market analysts have said.

The S&P 500 retreated from session highs as yields rose on Tuesday, reflecting investor concerns about the day’s surge in bond yields, said Robert Phipps, director of Per Stirling Capital Management in Austin. , in Texas. Equities would likely tolerate a gradual rise in rates, but a higher sprint could create turbulence, he said.

“Even though interest rates are still very low, the stock market is going to be very, very sensitive to changes,” 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 by 25.65 points, or 0.18%, to 14,069.83.

A sharp drop in new coronavirus infections, progress in vaccinations and a stronger-than-expected fourth-quarter earnings season have raised hopes for a rapid recovery in business this year.

Reports on this week’s earnings from Hilton Worldwide Holdings Inc, Hyatt Hotels Corp, Marriott International Inc, Norwegian Cruise Lines and TripAdvisor Inc will be closely watched for signs of a recovery in global travel demand.

Shares of cryptocurrency and blockchain-related companies, including Silvergate Capital Corp, Riot Blockchain, and Marathon Patent Group, jumped 8% to 21% as bitcoin briefly surpassed $ 50,000.

Investors will also focus this week on the minutes of the Federal Reserve’s January meeting, where it reaffirmed its promise to maintain an accommodative policy.

Rising issues outnumbered falling issues on the NYSE by a ratio of 1.04 to 1; on the Nasdaq, a ratio of 1.17 to 1 favored the advancers.

The S&P 500 posted 75 new 52-week highs and no new lows; the Nasdaq Composite recorded 363 new highs and nine new lows.