The Dow Jones Industrial Average added 0.09%, to 31,458.4, the S&P 500 advanced 0.47%, to 3,934.83 and the Nasdaq Composite rose 0.5%, to 14,095.47
The S&P 500 and Nasdaq closed at record closing highs on Friday as investors bought energy, financial and materials shares and sold big tech stocks amid expectations of a new U.S. fiscal aid.
The major indices traded in a tight range during the week in which investors rotated out of growth-oriented stocks and bought cyclical and under-priced value stocks.
The S&P energy and materials sectors rose on expectations they will benefit from a reopened economy, while heavyweights Apple Inc, Tesla Inc and Microsoft Corp dropped. All the three indices ended higher.
Value and cyclicals outperform in a rising interest rate, higher-growth environment, which the U.S. economy is on the cusp of entering, said Thomas Hayes, chairman and managing member of hedge fund Great Hill Capital LLC in New York.
We’re under-estimating the lag effect of all the money in the system as more and more vaccinations are delivered and as more of the country reopens, from business shutdowns he said.
We are continuing this rotation that would be consistent with the new business cycle, and as (bond) yields go up, value and cyclicals will lead, Hayes said.
The Cboe Volatility Index finished below 20 for first time since February 2020.
Markets hit new highs amid a sharp drop in the number of new COVID-19 cases and hospitalizations in recent weeks, though a near-term pullback is expected amid new coronavirus variants and potential snags in vaccine distributions.
There was an unexpected drop in U.S. consumer sentiment in early February as households were worried about the economy despite expectations for additional stimulus.
According to a Reuters poll, the U.S. economy is expected to reach pre-COVID-19 levels within a year as the proposed $1.9 trillion fiscal bill helps boost economic activity, but it will likely be a year before employment figures recover fully.
Meanwhile U.S. President Joe Biden turned to a bipartisan group of local officials for support on his $1.9 trillion coronavirus relief plan.
In the largest weekly inflow since March 2008, U.S.-based stock funds attracted $22.9 billion in the week to Wednesday, the Lipper data showed.
U.S. stock markets will be closed on Monday for the Presidents Day holiday.
The Dow Jones Industrial Average added 27.7 points, or 0.09%, to 31,458.4, the S&P 500 advanced 18.45 points, or 0.47%, to 3,934.83 and the Nasdaq Composite rose 69.70 points, or 0.5%, to 14,095.47.
Volume on U.S. exchanges was 13.27 billion shares.
Advancing issues outnumbered declining ones on the NYSE by a 1.35-to-1 ratio; on Nasdaq, a 1.22-to-1 ratio favoured advancers.
While the S&P 500 posted 52 new 52-week highs without any new lows, the Nasdaq Composite recorded 261 new highs and 17 new lows.
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