* The rotation in value stocks lifts the S&P 500
* Nio falls on a temporary production ban
* L Brands hits a 4-year high due to the forecast boost
* Index rally: Dow 1.39%, S&P 1.66%, Nasdaq 1.24% (Adds details on Dow, S&P 500 hits record highs)
By Herbert Lash
NEW YORK, Feb. 6 / PRNewswire / – The S&P 500 and Dow rose in a broad-based rally on Friday, with technology, healthcare and financials providing the biggest boost as investors bet on a recovery that will see the fastest economic growth since 1984 can be expected.
The S&P 500 and Dow finished a week higher as investors rebalanced their portfolios at the end of the quarter and continued to buy stocks that could benefit from a growing economy while adding some rundown tech stocks.
The Nasdaq also ended higher as less popular tech stocks rose, but the composite index posted its second straight weekly decline.
Wall Street rose sharply in the last half hour of trading, raising all three indices by more than 1%. The S&P 500 and Dow made record highs.
The Russell 1000 Value Index, which includes energy, banking and industrial stocks, is up more than 10% this year, outperforming its counterpart of the Russell 1000 Growth Index, which is just above breakeven for the year.
Some of the tech heavyweights, like Tesla Inc and Google parent Alphabet Inc, gave way, but Microsoft Corp and Facebook Inc bucked the trend and helped lift the S&P 500 and Nasdaq higher.
“It’s less of a step out of technology than a step that shows a wider appetite for stocks to incorporate both growth and value,” said John Stoltzfus, chief investment strategist at Oppenheimer Asset Management in New York.
The Dow Jones Industrial Average rose 453.4 points, or 1.39%, to 33,072.88. The S&P 500 gained 65.02 points or 1.66% to 3,974.54 and the Nasdaq Composite rose 161.05 points or 1.24% to 13,138.73.
During the week, the S&P rose 1.6% and the Dow 1.4%, while the Nasdaq fell 0.6%.
The volume on the US exchanges was 12.23 billion shares, compared to the average of 13.67 billion for the entire session over the last 20 trading days.
L Brands rose 3.7% after the owner of Victoria’s Secret raised its earnings forecast for the current quarter for the second time this month as consumers issue their stimulus checks and relax COVID-19 restrictions.
The Federal Reserve raised its GDP estimate for 2021 from 4.2% to 6.5% last week, and many economists are expecting even faster growth, which has raised fears that the economy will get too hot and the Fed will raise interest rates might force.
The dollar fell but remained near the four-month peaks due to continued optimism about the US economy.
“It has been difficult to narrow our US growth forecast over the past few months. We updated our estimates almost as quickly as we lowered them a year ago,” said Carl Tannenbaum, chief economist at Northern Trust, told Reuters Global Markets Forum.
Bank stocks rose 1.9% as the Fed said it would lift earnings-related restrictions on bank dividends and share buybacks for “most companies” in June after its next round of stress tests.
The benchmark 10-year US Treasury note yield rose to 1.66%, below last week’s 1.75% increase, which sparked a sell-off on inflation fears and a possible rate hike by the Fed – something the Fed is doing has promised not to do.
The market is concerned that the Fed is suddenly being forced to step up against its repeated mantra, which it will not do, said Marvin Loh, a leading global macro strategist at State Street Global Markets.
“The real concern is that things may overheat and the Fed may be forced to change its mind,” he said.
Energy stocks rose 2.6% and saw crude oil prices soar after a giant container ship blocking the Suez Canal raised fears of a supply shortage.
Ten of the eleven major S&P sectors rose, with only the communications services index in the red.
Nio Inc slumped 4.8% when the Chinese electric vehicle manufacturer announced that it would suspend production at its Hefei plant for five working days due to a shortage of semiconductor chips.
Latest data showed US consumer spending declined the most in 10 months in February, as a cold snapshot hit many parts of the country and the rebound of a second round of economic reviews faded, although the decline is likely temporary.
Progressive issues outperformed declining issues on the NYSE by a ratio of 3.30 to 1; On Nasdaq, a ratio of 1.81 to 1 favored the advanced.
The S&P 500 posted 65 new 52-week highs and no new lows. The Nasdaq Composite made 82 new highs and 51 new lows.
(Reporting by Herbert Lash in New York Additional reporting by Devik Jain and Medha Singh in Bengaluru Editing by Maju Samuel and Matthew Lewis)