US Markets

US STOCKS-Dow hits record high on boost from economy-linked stocks; Nasdaq drops

Credit: REUTERS/MIKE SEGAR

The Dow Jones Industrial Average hit a record high on Monday on hopes that interest rates would remain lower for longer, while the S&P 500 was subdued as a slide in technology shares offset a surge in commodity-linked energy and material stocks.

By Medha Singh and Sruthi Shankar

May 10 (Reuters) - The Dow Jones Industrial Average hit a record high on Monday on hopes that interest rates would remain lower for longer, while the S&P 500 was subdued as a slide in technology shares offset a surge in commodity-linked energy and material stocks.

The Nasdaq, on the contrary, dropped 1.5% as some of the market leaders of 2020 - Apple Inc AAPL.O, Amazon.com Inc AMZN.O, Facebook Inc FB.O and Tesla Inc TSLA.O - fell between 1.4% and 4%.

The materials sector .SPLRCM hit a record high as miners and makers of steel products gained after gold, copper and aluminum scaled new peaks. MET/L

The energy index .SPNY jumped to its highest in more than one year after a cyber attack on top U.S. pipeline operator Colonial Pipeline shuttered a fuel network that transports nearly half of the East Coast's supplies. O/R

The S&P 500 and the Dow ended at record closing highs on Friday as an unexpected slowdown in monthly jobs growth fueled bets that the U.S. Federal Reserve would remain accommodative for longer.

With latest economic reports depicting that the U.S. economy is not recovering at the explosive pace as previously forecast, inflation numbers and retail sales data this week could chart the next course for U.S. equities.

"Inflation data is pretty important from a market leadership perspective," said Keith Parker, head of U.S. and global equity strategy at UBS.

"The number should come in strong, and probably contribute to another leg in the reflation value rotation."

Breakeven rates on inflation on five-year and 10-year U.S. Treasury Inflation-Protected Securities (TIPS), a proxy to inflation expectations, roared to their highest since 2011 and 2013 respectively. US/

The Russell 1000 value index .RLV, which includes economically sensitive financials and energy stocks, added 0.9%, while its tech-heavy growth counterpart .RLG shed 1.1%.

At 11:32 a.m. ET, the Dow Jones Industrial Average .DJIwas up 299.59 points, or 0.86%, at 35,077.35, rising for the seventh straight session, while the S&P 500 .SPXwas down 0.39 points, or 0.01%, at 4,232.21 and the Nasdaq Composite .IXICwas down 205.65 points, or 1.50%, at 13,546.59.

Economy-linked financials .SPNY, industrials .SPLRCI and healthcare .SPXHC hit fresh peaks and provided the biggest boost to the S&P 500.

Technology .SPLRCT, communication services .SPLRCL and consumer discretionary .SPLRCD that house megacap technology-related stocks were the only S&P sectors in the red.

The NYSE FANG+TM index .NYFANG and Philadelphia semiconductor index declined nearly 3% each.

The Dow transports .DJT, considered a barometer of economic health, added about 1.2%.

Cybersecurity firm FireEye FEYE.O rose 4.8% as industry sources said the company was among those helping Colonial Pipeline to recover from one of the most disruptive digital ransom schemes reported.

Tyson Foods Inc TSN.N dropped 2% after the U.S. meat processor warned rising costs would start to hit profits.

Advancing issues outnumbered decliners by a 1.36-to-1 ratio on the NYSE. Declining issues outnumbered advancers for a 1.68-to-1 ratio on the Nasdaq.

The S&P index recorded 214 new 52-week highs and no new low, while the Nasdaq recorded 189 new highs and 110 new lows.

(Reporting by Medha Singh and Sruthi Shankar in Bengaluru; Editing by Maju Samuel)

((Medha.Singh@thomsonreuters.com; within U.S. +1646 223 8780, outside U.S. +91 80 6182 2802; Twitter: https://twitter.com/medhasinghs;))

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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