Wall Street climbs with defensive sectors out front

(Reuters) – The S&P 500 rose on Wednesday for the ninth time in the past 10 sessions although defensive sectors took their turn to lead the gains after data showed U.S. private payrolls expanded last month, but at a much slower pace than expected.

The indexes pared gains briefly before regaining ground in the late afternoon after the Federal Reserve’s “Beige Book” report showed a modest increase in activity for U.S. businesses and an increase in employment through late August, while economic growth remained sluggish in parts of the country.

The blue-chip Dow edged up toward its Feb. 12 record high but was still 2% below the milestone. The tech-heavy Nasdaq, now more than 20% above its pre-crisis high, rose at a slower pace on Wednesday.

It was hurt by losses in shares such as Apple Inc, Tesla Inc and Zoom Video Communications Inc.

“A handful of technology stocks have been a great place to be over the last several months, but at some point you need to kind of be on the lookout for other opportunities outside of those concentrated names,” said Adam Phillips, director of portfolio strategy at EP Wealth Advisors in Torrance, California.

The defensive utilities, consumer staples and real estate, which have trailed the broader market this year, posted some of the biggest percentage gains among major S&P sectors on Wednesday.

The Russell 1000 value index was up 1.2%, while the Russell 1000 growth index rose 0.7%.

“It’s positive momentum all around. I don’t think you’ll get a sustained rotation,” said Janet Walker, senior portfolio manager at Abbot Downing in San Francisco, who also cited the latest positive reports on COVID-19 treatments and vaccines.

At 2:20 p.m. EDT, the Dow Jones Industrial Average was up 290.91 points, or 1.02%, at 28,936.57, the S&P 500 gained 38.95 points, or 1.10%, to 3,565.6 and the Nasdaq Composite added 71.09 points, or 0.6%, to 12,010.76.

U.S. private payrolls increased last month from July, according to the ADP report, but fell short of economists’ forecast. Investor focus will now be on the government’s comprehensive employment report which is slated for Friday.

Abbot Downing’s Walker expects Friday’s government payroll numbers to also reflect a stalling from July to August. As a result she says it will be important for U.S. lawmakers to reach an agreement for a new fiscal coronavirus relief bill.

Weakness in the jobs report “could become a bigger risk if there’s a delay in stimulus,” she said. “For us to continue to recover we’re going to need to see additional stimulus.”

Nvidia Corp, the best-performing S&P 500 constituent this year, was also one of the benchmark’s biggest boosts on Wednesday, gaining 3.7% after several brokerages hiked their price targets on its shares after its announcement of powerful gaming chips in collaboration with Micron Technology Inc and Samsung Electronics Co Ltd.

Some market experts have warned that at these elevated levels, Wall Street’s indexes are ripe for a pullback, especially in the weeks leading up to the Nov. 3 election.

Advancing issues outnumbered declining ones on the NYSE by a 1.35-to-1 ratio; on Nasdaq, a 1.09-to-1 ratio favored advancers.

The S&P 500 posted 75 new 52-week highs and no new lows; the Nasdaq Composite recorded 132 new highs and 43 new lows.

Source: reuters.com

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