Dow hits record high on cyclical boost ahead of Fed minutes; technology is falling

The Wall St. sign is seen outside the New York Stock Exchange (NYSE) in New York, USA, December 17, 2019. REUTERS / Brendan McDermid

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  • drops when UBS moves to the sideline
  • Intel jumps on Northland Capital Markets upgrade
  • Indices: Dow up 0.25%, S&P down 0.17%, Nasdaq down 0.92%

January 5 (Reuters) – The Dow set a record on Wednesday as investors traded technology stocks for finance-related cyclical stocks that could benefit from a high-yield environment, ahead of the minutes of the Federal Reserve’s December meeting.

Seven of the 11 major S&P sectors continued trading in the early afternoon with value-oriented energy (.SPNY), finance (.SPSY) and materials stocks (.SPLRCM) leading the flock.

Tech giants including Apple Inc (AAPL.O) Google owner Alphabet Inc (GOOGL.O),, Meta Platforms (FB.O) and Microsoft Corp (MSFT.O) fell between 0.5% and 2.2 % to weigh the most on the S&P 500 (.SPX) and Nasdaq (.IXIC) indices.

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Growth stocks were also under pressure from a recent rise in US government interest rates, triggered by growing anxiety about the prospect of interest rate hikes by the Fed to curb inflation.

“We’re seeing a definite shift from technology as the 10-year return has increased,” said John Lynch, chief investment officer at Comerica Wealth Management.

“You’ve just seen some of these positions relax, but nonetheless, higher market interest rates weigh on technology.”

The US Federal Reserve said last month that it would close its bond purchases from the pandemic in 2022, which signaled at least three rate hikes for the year. Minutes from the meeting must be delivered at 1400 ET / 1900 GMT. Inc (CRM.N) fell 5.4% after UBS downgraded its stock to “neutral” from “buy”.

At 12:07 ET the Dow Jones Industrial Average (.DJI) was up 92.07 points, or 0.25%, to 36,891.72, the S&P 500 (.SPX) was down 8.05 points, or 0.17% , to 4,785.49 and Nass. .IXIC) was down 144.08 points, or 0.92%, to 15,478.64.

Intel Corps jumped 4.1% and was the largest percentage gain on the Dow index after Northland Capital Markets upgraded the chipmaker’s shares to “outperform” from “market performance”.

The ADP National Employment report showed that private wages increased by 807,000 jobs last month, more than double what economists asked by Reuters had predicted. read more

The report comes ahead of the Ministry of Labor’s more comprehensive and closely monitored non-farm wage data for December on Friday.

Peloton Interactive (PTON.O) fell 0.8% after JP Morgan cut the price target on the training company’s shares due to expectations of weaker demand.

AT&T Inc (TN) rose 3.8% after the US telecom company increased by 880,000 monthly pay phone subscribers in the fourth quarter. read more

Meanwhile, Citigroup analysts said they now expect the S&P 500 index to reach 5,100 by the end of 2022, based on strong corporate income. read more

Advanced issues outpaced the declines by 1.17 to 1 on the NYSE. Declining issues were more than progress for a ratio of 1.38 to 1 on the Nasdaq.

The S&P index registered 59 new 52-week highs and no new lows, while Nasdaq registered 69 new highs and 109 new lows.

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Reporting by Devik Jain and Shreyashi Sanyal in Bengaluru; Edited by Maju Samuel

Our standards: Thomson Reuters Trust Principles.

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