Stocks Rally to Record as Small Caps Outpace Tech: Markets Wrap
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(Bloomberg) -- Stocks climbed to a record as the rotation to economically-sensitive industries regained momentum even with a surge in coronavirus cases that could lead to more restrictions and crimp growth.
Both the S&P 500 and the Russell 2000 Index of small caps rallied to all-time highs, while the Dow Jones Industrial Average rose to pre-pandemic levels. All major groups in the equity benchmark advanced, with energy, industrial and financial companies among the biggest gainers. The tech-heavy Nasdaq 100 underperformed major gauges, with stay-at-home winner Zoom Video Communications Inc. tumbling. Walt Disney Co. jumped on solid results, and Cisco Systems Inc. climbed after upbeat sales projections. Tesla Inc., whose Chief Executive Officer Elon Musk tweeted he may have Covid-19, fell. DoorDash Inc., the biggest U.S. food delivery platform, filed for an initial public offering.
The risk-on mood fueled a rotation into value and cyclical sectors, whereas more defensive industries underperformed. Stock funds attracted a record amount after positive results for a coronavirus vaccine, adding $44.5 billion in the week through Nov. 11, according to Bank of America Corp. and EPFR Global data. While the latest figures on Covid-19 continued to fuel concern, with the surge in U.S. infections now spread to 49 states, the S&P 500 notched a second weekly rally.
“You have this push-pull,” said Tom Hainlin, national investment strategist at U.S. Bank Wealth Management’s Ascent Private Wealth Group. “As people become more optimistic, you get the recovery in the more cyclical sectors, and then as the optimism wanes a bit, you go back into the tech stocks.”
New York’s daily Covid-19 cases exceeded 5,000, the highest for the state since April, as New York City Mayor Bill de Blasio warned parents to prepare for city schools to halt in-person classes as soon as Monday. California, Oregon and Washington state urged arriving people to self-quarantine, while Illinois reported a record number of daily infections and hospitalizations, a day after Chicago announced a stay-home advisory.
Federal Reserve Bank of St. Louis President James Bullard and New York head John Williams both voiced concerns about the economic impact of the pandemic, echoing previous comments from Fed Chairman Jerome Powell. U.S. consumer sentiment unexpectedly declined in early November as an increase in Covid-19 infections and the election prompted Americans to reassess their outlooks. Meanwhile, a key measure of prices paid to U.S. producers decelerated in October, consistent with a pandemic that continues to limit pricing power.
These are some of the main moves in markets:
Stocks
- The S&P 500 gained 1.4% at 4 p.m. New York time.
- The Stoxx Europe 600 Index was little changed.
- The MSCI Asia Pacific Index climbed 0.2%.
Currencies
- The Bloomberg Dollar Spot Index declined 0.4%.
- The euro advanced 0.2% to $1.1835.
- The Japanese yen appreciated 0.5% to 104.59 per dollar.
Bonds
- The yield on 10-year Treasuries advanced one basis point to 0.89%.
- Germany’s 10-year yield dipped one basis point to -0.55%.
- Britain’s 10-year yield decreased one basis point to 0.338%.
Commodities
- The Bloomberg Commodity Index was little changed.
- West Texas Intermediate crude fell 2.4% to $40.15 a barrel.
- Gold rose 0.6% to $1,888.12 an ounce.
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