US Stocks End Flat Though Energy And Financials Gain

The S&P 500 financial sector hit a record high, while expected growth in fuel demand boosted oil prices and helped lift the energy sector 3.9%, its biggest one-day gain in nearly four months. The heavyweight tech sector fell while the healthcare sector was dragged down by a weak profit forecast from Abbott Laboratories.

Data showed US manufacturing activity picked up in May as pent-up demand in a reopening economy boosted orders. But unfinished work piled up because of shortages of raw materials and labour.

"People came back from a holiday weekend convinced that the economy is recovering nicely and that any inflation that we might be seeing in labour and other costs is temporary," Peter Tuz, president of Chase Investment Counsel in Charlottesville, Virginia.

The Dow Jones Industrial Average rose 0.13 percent, to 34,575; the S&P 500 lost 0.05 percent, at 4,202; and the Nasdaq Composite dropped 0.09 percent, to 13,736.

Along with sharp gains for financials and energy, the small-cap Russell 2000 rose 1.1 percent on Tuesday, underscoring strength for segments of the stock market expected to do particularly well in an expanding economy.

While the S&P 500 remains less than 1% of its record high after four straight months of gains, investors are worried about whether rising inflation could hit equity prices.

"We have supply chain issues, delays, price increases, pricing pressures in general, we have got employers saying they have got difficulty sourcing labor," said Kristina Hooper, chief global market strategist at Invesco in New York.

"So this is a microcosm of what we are already hearing about and seeing in the overall economy and it's just a reminder that inflation remains a concern." (Reuters)