US Shares Churn Higher as Sector Rotation Continues Amid Stimulus Hopes

The major U.S. stock indexes closed higher on Friday on lackluster trading ahead of the long U.S. holiday weekend. U.S. financial markets are closed on Monday for Presidents’ Day. Despite the relatively light volume, there were enough buyers to push the S&P 500 and NASDAQ Composite to record closing highs.

The stock rotation that began earlier in the week continued on Friday with investors driving up energy, financial and materials shares, while trimming positions in big tech stocks. The motivation behind the strategy centered upon which stocks would benefit the most from new fiscal aid from Washington to help the U.S. economy recover.

Cash Market Performance

In the cash market on Friday, the benchmark S&P 500 Index settled at 3934.83, up 18.45 or +0.47%. The blue chip Dow Jones Industrial Average finished at 31458.40, up 27.70 or +0.09% and the NASDAQ Composite closed at 14095.47.

The S&P 500 hit an all-time peak on Friday, while the NASDAQ and Dow did earlier in the week.

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

The CBOE Volatility Index, Wall Street’s so-called fear gauge, closed below 20 for the first time since February 2020.

Finally, advancing issues outnumbered declining ones on the NYSE by a 1.35-to-1 ratio; on NASDAQ, a 1.22-to-1 ratio favored advancers.

Stock Related Developments

PayPal Holdings Inc rose 4.7% 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% from a record high after a more than 13% run up to its results over the last two weeks.

Dating app operator Bumble Inc jumped 7.3%, a day after a stellar debut sent its shares up more than 75%. Chief Executive Officer Whitney Wolfe Herd’s stake in the women-centric dating app operator was worth nearly $2 billion.

COVID-19 Reactions

A sharp drop in new COVID-19 cases and hospitalizations in recent weeks have helped drive markets to new highs, though a near-term pullback could occur from the new coronavirus variants and potential snags in vaccine distributions.

US Economic News

The latest data showed U.S. consumer sentiment unexpectedly fell in early February as households were still worried about the economy despite expectations for additional stimulus.

Investors Eyeing Fiscal Stimulus Package

U.S. President Joe Biden turned to a bipartisan group of local officials for support on his $1.9 trillion coronavirus relief plan to help millions of unemployed workers and for schools to reopen.

Meanwhile, a Reuters poll showed 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 employment will likely take more than a year to fully recover.

For a look at all of today’s economic events, check out our economic calendar.

This article was originally posted on FX Empire

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