Wall Street Flat As Investors Switch To Cyclicals

Stocks on Wall Street closed near break-even on Friday as investors sold technology shares that have rallied through the pandemic and rotated into cyclical stocks set to benefit from pent-up demand once the coronavirus pandemic is subdued.

Industrials led rising sectors in the S&P 500, spurred by a 9.9 percent surge in Deere & Co and Caterpillar's 5 percent gain to an all-time peak of US$211.40 a share. Financials, materials and energy, along with industrials, rose more than 1 percent.

The S&P 1500 airlines index jumped 3.5 percent, with post-pandemic travel in focus.

The stay-at-home winners, including Microsoft, Facebook, Alphabet's Google and Netflix, fell in a trend seen for most of the week. Amazon.com also fell, as investors sold the leaders in the big rally since last March.

A battle continues between tech-led growth stocks and cyclicals, companies that are heavily affected by economic conditions, said Tim Ghriskey, chief investment strategist at Inverness Counsel in New York.

"When the economy is roaring, they're roaring. When the economy is weakening, they're weakening," Ghriskey said of cyclicals. "The economy will roar, at least for a period of time. There's huge pent-up demand, whether just for travel or going back to work."

The Dow Jones Industrial Average edged up less than a point to 31,494 and the Nasdaq added 0.07 percent, to 13,874. The S&P 500 dropped 0.19 percent, to 3,907.

Strong earnings, progress in vaccination rollouts and hopes of a US$1.9 trillion federal coronavirus relief package helped U.S. stock indexes hit record highs at the start of the week.

The Dow hit an all-time intraday peak, led by Caterpillar, after Deere raised its 2021 earnings forecast. Deere reported profit more than doubled in the first quarter on rising demand for farm and construction machinery.

The benchmark S&P 500 and the tech-heavy Nasdaq posted their first weekly declines this month on concerns over higher stock market valuations, and expectations of rising inflation led to fears of a short-term pullback in equities. (Reuters)