By Administrator_India
The Dow and the S&P 500 hit record highs on Wednesday, as investors piled into financial and industrial stocks on bets a Democratic sweep in Georgia would lead to more fiscal stimulus and infrastructure spending.
But Wall Street pared gains and the Nasdaq index fell after the US Capitol went into lockdown as supporters of President Donald Trump stormed the building.
“Anything that happens that disruptive is a concern for investors but panic is probably not a good strategy here,” said Randy Frederick, vice president of trading and derivatives for Charles Schwab in Austin, Texas citing the break in to the Capitol building.
Rate-sensitive bank shares jumped nearly 7%, tracking a surge in the benchmark 10-year U.S. Treasury yield above 1%.
Democrats won one US Senate race in Georgia and led in another, moving closer to a surprise sweep in a former Republican stronghold that would give them control of Congress and the power to advance President-elect Joe Biden’s policy goals. A final outcome is not expected until later on Wednesday.
As this developed, US Vice President Mike Pence opened a joint session of Congress to formally certify Democratic President-elect Joe Biden’s victory, rejecting President Donald Trump’s demand that he unilaterally reject electoral votes.
“The rally in the broad market is being led by traditional value and cyclical names,” said Ross Mayfield, investment strategy analyst, at Baird. “I think that has everything to do with the big spending that is promised in 2021, as a further boost to the economic reopening seen to benefit those names.” A Democrat-controlled Senate typically ushers in increased fiscal spending while raising the chances of tax hikes and tougher regulation, and would be a net positive for economic growth globally and thus for most risk assets.
The Russell 1000 value index, which is heavily weighted toward cyclical sectors, rose 2.8%, while the growth index, with a large tech company weighting, shed 0.4%.
Increased risk of antitrust scrutiny of Big Tech pressured shares of companies, with Apple Inc, Microsoft Corp , Amazon.com Inc, Google-parent Alphabet Inc and Facebook Inc falling.
Tesla Inc was the only major technology stock trading higher, up 4.3% to $767.01.
In early afternoon trading, the Dow Jones Industrial Average rose 425.15 points, or 1.4%, to 30,816.75, the S&P 500 gained 29.08 points, or 0.78%, to 3,755.94 and the Nasdaq Composite dropped 34.53 points, or 0.27%, to 12,784.43.
The small-cap Russell 2000 index jumped 4.1% after earlier hitting a record high.
Hopes of a vaccine-powered economic recovery in 2021 pushed Wall Street’s main indexes to record highs in late-December, with sectors that had previously lagged, including banks, industrials and energy, fuelling the rally.
AmerisourceBergen Corp gained 7.3% after the US drug wholesaler said it would buy Walgreens Boots Alliance’s drug distribution business for $6.5 billion to expand in Europe. Dow component Walgreens rose 4.6%.
Advancing issues outnumbered declining ones on the NYSE by a 1.88-to-1 ratio; on Nasdaq, a 1.82-to-1 ratio favored advancers.
The S&P 500 posted 89 new 52-week highs and !Empty value new lows; the Nasdaq Composite recorded 311 new highs and 7 new lows.
