Banks power Dow to record peak; Tech drags S&P 500, Nasdaq lower
The Dow hit a record high on Tuesday, boosted by banks and industrial stocks as worries about the Omicron variant of the coronavirus subsided, while a fall in heavyweight technology stocks dragged the S&P 500 and the Nasdaq indexes lower.
The S&P 500 (.SPX) too scaled an intraday all-time high before falling, as the World Health Organization said more evidence is emerging that the coronavirus variant caused milder symptoms than previous variants.
Seven of the 11 major S&P sectors advanced. Value-oriented and cyclicals such as energy (.SPNY) and financials (.SPSY) led the pack, up 3.5% and 2.7%, respectively. The technology sector (.SPLRCT) underperformed, down 1.6%
“We do know that the seasonality of the first several days of a new year brings in new money. You’ve got a couple of stutter steps here and some decisions to be made in rebalancing portfolios,” said Art Hogan, chief market strategist at National Securities in New York.
“While we know (Omicron) is transmitting very rapidly, the symptoms seem to be far less severe. And the combination of those two things gives us some hope that this will likely burn out faster than any of the other variants that we’ve seen.”
Travel stocks rose, with the S&P 1500 airlines index (.SPCOMAIR) rising 1.5% and cruise operators Norwegian Cruise Line Holdings (NCLH.N), Royal Caribbean (RCL.N) and Carnival Corp (CCL.N) adding between 1.1% and 2%.
The S&P 500 banks sector (.SPXBK) added 3.7%, while the broader value index (.IVX)climbed 1.2% to hit a record high.
Robert Pavlik, senior portfolio manager at Dakota Wealth Management, said the value trade could lead markets in the first half of this year on expectations of interest rate hikes by the Federal Reserve.
The U.S. central bank said last month it would be ending its pandemic-era bond buying in 2022, signaling at least three rate hikes for the year. Minutes from the meeting is expected to be released on Wednesday.
Ford Motor Co (F.N)jumped 11.1% after the automaker said it will nearly double annual production capacity for its red-hot F-150 Lightning electric pickup to 150,000 vehicles. read more
General Electric Co rose 2.9% after Credit Suisse upgraded the conglomerate’s stock to “outperform” from “neutral”.
Foot Locker Inc slipped 3.1% after J.P. Morgan downgraded the sports and footwear retailer’s stock to “underweight” from “neutral”.
At 12:00 p.m. ET, the Dow Jones Industrial Average (.DJI) was up 247.62 points, or 0.68%, at 36,832.68 and the S&P 500 (.SPX) was down 4.02 points, or 0.08%, at 4,792.54.
The Nasdaq Composite (.IXIC) was down 258.67 points, or 1.63%, at 15,574.13, dragged down by declines in shares of Amazon.com , Microsoft Corp (MSFT.O), Nvidia Corp (NVDA.O) and Tesla Inc (TSLA.O).
Data showed U.S. manufacturing slowed in December amid some cooling in demand for goods, but investors took solace in signs of supply constraints easing.
Advancing issues outnumbered decliners by a 1.30-to-1 ratio on the NYSE. Declining issues outnumbered advancers for a 1.51-to-1 ratio on the Nasdaq.
The S&P index recorded 66 new 52-week highs and one new low, while the Nasdaq recorded 81 new highs and 60 new lows.