NEW YORK (Reuters) – The S&P 500 barely closed in positive territory on Wednesday as an expected stimulus deal and declining jobless demands prompted investors to invest their money in sectors that are most likely to benefit from the economy reopening when it recovers from the global health crisis.
While Blue-chip Dow and small caps led the gains, the tech-heavy Nasdaq session ended lower.
Economically vulnerable economic stocks, which were hit by mandated closures and have the greatest benefit from economic recovery, performed better.
The rotation to cyclic drugs reflects a growing confidence in recovery from the pandemic recession, beginning in seizures and starting after promising vaccine data from the late stage were released in early November.
“It’s a very welcome sign to see rotation in beaten sectors,” said Matthew Keator, managing partner of Keator Group, a wealth management firm in Lenox, Massachusetts. “It talks about the importance of valuation and the importance of diversification.”
“It also speaks to the hope that is out there,” Keator added. “When you see oil uptake and the travel and tourism industries rising, it speaks to the market that looks ahead and prices in that hope.”
The possibility of a shutdown of the US government at the turn of the year as well as the lack of a new fiscal stimulus lifted its head after President Donald Trump threatened to veto a $ 2.3 trillion funding package, which also includes a long-awaited $ 892 billion pandemic deal.
A Brexit trade deal between Britain and the European Union seemed more likely after a senior European diplomat told Reuters an agreement could be imminent.
A series of mixed economic data showed a welcome decline in the number of vacancies and an increase in new orders for durable goods, but also a contraction in consumption spending, a decline in personal income and a waning mood as the holiday trading season draws to a close amid a resurgent pandemic.
However, weak inflation data provided further assurance that the US Federal Reserve is likely to maintain its accommodative monetary policy at least until 2024.
The Dow Jones Industrial Average rose 114.32 points or 0.38% to 30,129.83, the S&P 500 rose 2.75 points or 0.07% to 3,690.01 and the Nasdaq Composite fell 36.80 points or 0.29% to 12,771.11 .
Of the 11 major sectors in the S&P 500, everything except real estate technology and utilities ended the session in black.
Drugmaker Pfizer Inc rose 1.9% following an agreement with the United States to deliver 100 million additional doses of its COVID-19 vaccine by July.
Supernus Pharmaceuticals Inc increased 14.6% after its experimental drug for attention deficit hyperactivity disorder reached the main goal of a late-stage study in adults.
Shares in Nikola Corp fell 10.7% after canceling an agreement to develop electric garbage trucks with recycling and disposal company Republic Services Inc.
American Airlines Group and United Airlines Holdings rose 2.6% and 2.7%, respectively, after revealing plans to bring back furloughed employees this month. The aviation industry hopes to receive about $ 15 billion in wage subsidies as part of the pending tax relief package.
Forward issues exceeded the number of declines on the NYSE by a ratio of 2.38 to 1; on the Nasdaq favored a 1.73-to-1 ratio progress.
The S&P 500 sent 33 new 52-week highs and no new lows; The Nasdaq Composite recorded 280 new highs and two new lows.
Volume on US stock exchanges was 12.22 billion shares compared to the average of 11.52 billion over the last 20 trading days.
Reporting by Stephen Culp; Editing by Cynthia Osterman