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S&P, Nasdaq set record closing highs

·3-min read

The S&P 500 and Nasdaq have set record closing highs as investors bought energy, financial and materials shares and sold big tech stocks in anticipation of new fiscal aid from Washington to help the US economy recover.

The major indices traded in a tight range during the week in which investors rotated out of growth-oriented stocks that have dominated an almost year-long rally and bought cyclical and underpriced value stocks.

The S&P energy, financials and materials sectors rose on expectations they will benefit from a reopened economy, while heavyweights Apple Inc, Tesla Inc and Microsoft Corp were lower most of the session. All three closed higher in a late market surge.

Value and cyclicals outperformed in a rising interest rate, higher-growth environment, which the US economy was on the cusp of entering, said Thomas Hayes, chairman and managing member of hedge fund Great Hill Capital LLC in New York on Friday.

"We're underestimating 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, Wall Street's so-called fear gauge, closed below 20 for first time since February 2020.

The Lipper data late on Thursday showed US-based stock funds attracted $US22.9 billion in the week to Wednesday, the largest weekly inflow since March 2008.

US stock markets will be closed on Monday for the Presidents Day holiday.

The S&P 500 hit a record peak on Friday, while the Nasdaq and Dow did earlier in the week

The Dow Jones Industrial Average rose 27.7 points, or 0.09 per cent, to 31,458.4, the S&P 500 gained 18.45 points, or 0.47 per cent, to 3,934.83 and the Nasdaq Composite added 69.70 points, or 0.5 per cent, to 14,095.47.

Volume on US exchanges was 13.27 billion shares.

The small-cap index rose for the fifth week out of six full weeks this year. PayPal Holdings Inc rose 4.7 per cent after several brokerages raised their price targets following the payments company's investor day call a day earlier.

Walt Disney Co reported a surprise quarterly profit. However, its shares fell 1.7 per cent from a record high after a more than 13 per cent run up to its results over the last two weeks.

Dating app operator Bumble Inc jumped 7.3 per cent, a day after a stellar debut sent its shares up more than 75 per cent.

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.

The S&P 500 posted 52 new 52-week highs and no new lows; the Nasdaq Composite recorded 261 new highs and 17 new lows.