NEW YORK (REUTERS) - The Nasdaq ended higher on Friday (March 19), lifted by Facebook and energy shares, while the S&P 500 lost ground as US Treasury yields took a break from a recent surge.
Reversing a recent trend, so-called growth stocks mostly outperformed value stocks viewed as likely to benefit most as the economy recovers from the coronavirus pandemic.
The yield on US 10-year notes, which has risen sharply in the past seven weeks on growth expectations, hovered near a 14-month peak at 1.742 per cent.
"What we see today is a more stable rate environment across the curve after multiple weeks of rising interest rates, and we are seeing some degree of reversal of leadership in the equity market," said Bill Northey, senior investment director at US Bank Wealth Management in Minneapolis.
The S&P 500 banks index dropped 1.6 per cent after the US Federal Reserve said it would not extend a temporary capital buffer relief put in place to ease a pandemic-driven stress in the funding market.
"Banks have had such a significant up move this year and this news has only acted as a catalyst for profit taking," said Art Hogan, chief market strategist at National Securities in New York.
Optimism about a US$1.9 trillion (S$2.5 trillion) fiscal package and the Fed's promise to maintain its ultra-loose policy stance for years has accelerated a shift into economy-linked stocks, powering the S&P 500 and the Dow to record levels this week.
However, the Nasdaq is still about 6 per cent below its Feb 12 all-time closing high as technology and high-growth stocks have lost favor in recent months, with their valuations looking less attractive as Treasury yields rise.
The S&P 500 growth index rose 0.35 per cent, outperforming the value index's 0.48 per cent dip.
Several bond managers believe the recent pace of the rise in yields has been unsettling and also worry the market could be viewed as disorderly if the momentum continues.
The Dow Jones Industrial Average fell 0.71 per cent to end at 32,627.97 points, while the S&P 500 lost 0.06 per cent to 3,913.1.
The Nasdaq Composite climbed 0.76 per cent to 13,215.24.
For the week, the S&P 500 and Nasdaq fell 0.8 per cent, while the Dow lost 0.5 per cent.
Trading was orderly despite Friday being quadruple witching, the once-in-a-quarter simultaneous expiration of various derivatives, which often spurs heavy trading volume and some volatility.
"I think you saw a lot of the movement yesterday with that big selloff at the end of the day. A lot of that was to do with people closing out positions," said JJ Kinahan, chief market strategist at TD Ameritrade in Chicago.
Volume on US exchanges was 16.5 billion shares, compared with the 14.4 billion average for the full session over the last 20 trading days.
Visa fell more than 6 per cent, erasing almost US$30 billion of market capitalisation after reports that the company is being investigated by the US Department of Justice.
FedEx Corp rallied 6.1 per cent after the US delivery firm said quarterly profit jumped more than expected on higher prices and surging volume from pandemic-fueled e-commerce deliveries during the holiday shipping season.
Nike fell 4 per cent after the sports apparel maker missed quarterly sales estimates due to shipping issues and a pandemic-related slump at brick-and-mortar stores.
Advancing issues outnumbered declining ones on the NYSE by a 1.25-to-1 ratio; on Nasdaq, a 1.70-to-1 ratio favoured advancers.
The S&P 500 posted 13 new 52-week highs and no new lows; the Nasdaq Composite recorded 119 new highs and 26 new lows.