US Mar 15
The Dow struggled for direction Monday after hitting all-time highs as value stocks like energy and financials slid, but tech climbed underpinned by falling U.S. rates and rising chip stocks.
The Dow Jones Industrial Average rose 0.12%, or 39 points, and had hit intraday record of 32,931. The S&P 500 was up 0.16%, while the Nasdaq Composite was up 0.47%.
Value stocks were led lower by a fall in financials and energy, with the latter coming under pressure following a slip in oil prices.
Goldman Sachs (NYSE:GS), however, said that energy and financial still have room to grow despite strong gains already year to date.
"Our macro forecasts also suggest that two of the most quintessential value sectors [energy and financials] can still appreciate in coming months despite being the strongest recent performers in the market," the firm said in a note.
The cyclical sectors of the market were also hurt by a setback on the global vaccine front after several countries in the European Union, including Germany, paused use of the AstraZeneca (NASDAQ:AZN) vaccine on concerns about safety.
Airline stocks, however, shrugged off the vaccine news to move sharply higher on signs that more people are flying and booking trips in the U.S. United Airlines Holdings (NASDAQ:UAL), Delta Air Lines (NYSE:DAL) and American Airlines Group (NASDAQ:AAL) were higher, with the latter up 7%.
The Transportation Security Administration said that it screened 1.37 million people on Friday, the highest number of passengers it has seen on a single day since March 15 of last year.
In tech, Broadcom (NASDAQ:AVGO) and NXP Semiconductors (NASDAQ:NXPI) led the rally in chip stocks on expectations the ongoing chip shortage will continue to boost prices, and ultimately support earnings growth. The SOXX pared gains after rising more than 2%. NXP was added to the S&P 500 on Friday, following the index's quarterly rebalancing.
"Chip supply should be tight this year given chipmakers’ conservative capex plans coupled with growth in demand as the global economy recovers," KB Securities said, according to report from Business Korea. "From 2Q21, the rise in DRAM prices should accelerate amid a supply shortage while NAND prices should reverse upwards (previously expected in 3Q21)."
The broader tech sector was also pushed higher by a fall in interest rates with just a day to go until the Federal Reserve Open Market Committee kicks off its two-day policy meeting.
The Fed is expected to leave rates and the pace of its $120 billion monthly bond-buying program unchanged on Wednesday, but investors will be closely watching for any clues the central bank is willing to act if rates rise at a disorderly pace.
"[T]he decision for additional action is unlikely in the coming weeks, let alone days. In other words, we do not expect any announcement of further yield curve control or an Operation Twist-style adjustment to policy at this week’s meeting," Stifel said in a note.
Facebook (NASDAQ:FB), Apple (NASDAQ:AAPL) were higher, while Microsoft (NASDAQ:MSFT), Amazon.com (NASDAQ:AMZN) and Google-parent Alphabet (NASDAQ:GOOGL) were lower.
In other news, Eli Lilly and Company (NYSE:LLY) fell by 9% despite revealing a positive clinical update for its Alzheimer’s drug showing evidence of slowing the disease progress.
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