FILE PHOTO: The New York Stock Exchange (NYSE) is seen as people walk in silhouette in the financial district of New York, U.S., November 19, 2020. REUTERS/Shannon Stapleton

Reuters

Stocks rise on cyclical boost but megacaps curb gains

By Chuck Mikolajczak, Reuters | Updated - Nov. 23, 2020 at 12:58 p.m. | Posted - Nov. 23, 2020 at 5:42 a.m.


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NEW YORK (Reuters) — U.S. stocks rose in a choppy session on Monday as hopes for a COVID-19 vaccine boosted economically sensitive sectors such as energy and industrials, but a pullback in megacap shares held gains in check.

Cyclical sectors led gains, with energy ahead by more than 5% and industrials and financials each up more than 1%, as data showed monthly business activity expanded at the fastest rate in more than five years.

Energy shares also got a boost from oil prices, which have risen on anticipation a vaccine will help demand recover.

But declines in technology and tech-related heavyweight names such as Apple and Facebook muted gains as investors rotated out of stocks seen as safe bets following a coronavirus-led crash earlier this year.

"More of a cyclical day, or value day, than a growth day, but not overwhelmingly. We've had two weeks of a cyclically dominated market and that was initiated by the vaccine," said Tim Ghriskey, chief investment strategist at Inverness Counsel in New York.

"The market is battling between those two styles of investing depending on the outlook of the virus versus the vaccine."

The Dow Jones Industrial Average rose 247.3 points, or 0.85%, to 29,510.78, the S&P 500 gained 10.95 points, or 0.31%, to 3,568.49 and the Nasdaq Composite index added 6.72 points, or 0.06%, to 11,861.69.

Evidence of high efficacy rates in experimental COVID-19 vaccines had lifted the S&P 500 to a record high this month and brought the blue-chip Dow close to breaching 30,000 points for the first time, breathing new life into cyclical stocks that were beaten down during the recession.

AstraZeneca on Monday became the latest major drugmaker to say its vaccine could be around 90% effective, while the U.S. health regulator is likely to approve in mid-December the distribution of Pfizer's vaccine.

Volume is expected to be on the lighter side given a trading week shortened by the Thanksgiving holiday on Nov. 26.

Sentiment was dented by new lockdowns to contain a surge in coronavirus infections with Nevada on Sunday becoming the latest state to tighten curbs on casinos, restaurants and bars, while imposing a broader mandate for face-coverings over the next three weeks.

Hopes of more monetary stimulus were dampened after Treasury Secretary Steven Mnuchin last week pulled the plug on some of the Federal Reserve's pandemic emergency lending programs.

Richmond Federal Reserve Bank President Thomas Barkin said on Monday that households could struggle over the next several months without more government aid to provide support until a vaccine becomes widely available.

Tesla Inc surged 6.6%, inching closer to hitting $500 billion in market capitalization ahead of its inclusion in the S&P 500 next month.

Advancing issues outnumbered decliners on the NYSE by a 2.96-to-1 ratio; on Nasdaq, a 2.06-to-1 ratio favored advancers.

The S&P 500 posted 28 new 52-week highs and no new lows; the Nasdaq Composite recorded 163 new highs and 10 new lows.

(Reporting by Chuck Mikolajczak; Editing by Richard Chang)

© Copyright Thomson Reuters 2020

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Chuck Mikolajczak

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