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Stocks notch gains on Wall Street

Sinead Carew
·3-min read

The benchmark S&P 500 has closed barely higher while shares in smaller companies soared as investors favoured more economically sensitive market segments as they bet on a recovery in 2021.

US Treasury yields climbed and the small cap Russell 2000 outperformed throughout the session as did so-called cyclical sectors such as financials and energy, which are heavily dependent on a strong economy for growth.

Traders were betting that incoming US President Joe Biden, a Democrat, would usher in heftier fiscal stimulus and that a ramp up in distribution of coronavirus vaccines would boost the economy, according Michael James, managing director of equity trading at Wedbush Securities in Los Angeles.

"The financials and cyclicals have been the stars to start the year," James said.

"With the Biden's victory comes stimulus expectations"

Some investors said they were cautious ahead of earnings season while others monitored developments in Washington after supporters of outgoing US President Donald Trump stormed the Capitol last week.

As Democrats moved to impeach Trump for inciting the deadly rampage last week, Trump on Tuesday denied wrongdoing saying that his public comments on the day of the attack were "totally appropriate".

Also, the Washington Post reported that an FBI office in Virginia issued an internal warning the day before the Capitol invasion that extremists were planning to come to Washington and were talking of "war".

Trump's denial and the FBI story, which contradicts suggestions that the administration did not expect an attack, "highlight the fact that there's still a lot of issues in this country and we have a lot of progress to make before we can really go forward", said Michael O'Rourke, chief market strategist at JonesTrading in Stamford, Connecticut.

Unofficially, the Dow Jones Industrial Average on Tuesday rose 60 points, or 0.19 per cent, to 31,068.69, the S&P 500 gained 1.58 points, or 0.04 per cent, to 3,801.19 and the Nasdaq Composite added 36.00 points, or 0.28 per cent, to 13,072.43.

Throughout the day the communications services sector was the biggest percentage decliner among the S&P 500's 11 major industry indices.

Of the major sectors, energy stocks were leading gains throughout the session as crude prices rose.

The consumer discretionary sector saw some of its biggest single stock boosts coming from carmakers.

Shares in US automaker General Motors Co hit their highest in a decade after chief executive officer Mary Barra outlined plans for its first electric commercial vans to be delivered to FedEx Corp by year-end.

Also shares of Tesla Inc jumped as investors bet on a big expansion for the electric-car maker after a regulatory filing showed it registered a company in India.

The S&P financial sector traded above its February peak for the first time on Tuesday, boosted by rate-sensitive banks as benchmark US Treasury yields reached their highest levels since March.

Investors were also waiting for the fourth-quarter earnings season to start Friday, with results from JPMorgan, Citigroup and other big banks.