By Herbert Lash
NEW YORK (Reuters) - Stocks on Wall Street closed near break-even on Friday as investors sold technology shares that have rallied through the pandemic and rotated into cyclical stocks set to benefit from pent-up demand once the coronavirus pandemic is subdued.
Industrials led rising sectors in the S&P 500, spurred by a 9.9% surge in Deere (NYSE:DE) & Co and Caterpillar (NYSE:CAT)'s 5.0% gain to an all-time peak of $211.40 a share. Financials, materials and energy, along with industrials, rose more than 1%.
The S&P 1500 airlines index jumped 3.5%, with post-pandemic travel in focus.
The stay-at-home winners, including Microsoft Corp (NASDAQ:MSFT), Facebook Inc (NASDAQ:FB), Alphabet (NASDAQ:GOOGL)'s Google and Netflix Inc (NASDAQ:NFLX), fell in a trend seen for most of the week. Amazon.com Inc (NASDAQ:AMZN) also fell, as investors sold the leaders in the big rally since last March.
Value stocks rose 0.6% while growth fell 0.6%. Advancing stocks led declining shares by about a 2:1 ratio.
A battle continues between tech-led growth stocks and cyclicals, companies that are heavily affected by economic conditions, said Tim Ghriskey, chief investment strategist at Inverness Counsel in New York.
"When the economy is roaring, they're roaring. When the economy is weakening, they're weakening," Ghriskey said of cyclicals. "The economy will roar, at least for a period of time. There's huge pent-up demand, whether just for travel or going back to work."
The Dow Jones Industrial Average edged up 0.98 points, or 0%, to 31,494.32 and the Nasdaq Composite added 9.11 points, or 0.07%, to 13,874.46. The S&P 500 dropped 7.26 points, or 0.19%, to 3,906.71.
Volume on U.S. exchanges was 13.47 billion shares.
Strong earnings, progress in vaccination rollouts and hopes of a $1.9 trillion federal coronavirus relief package helped U.S. stock indexes hit record highs at the start of the week.
The Dow hit an all-time intraday peak, led by Caterpillar, after Deere raised its 2021 earnings forecast. Deere reported profit more than doubled in the first quarter on rising demand for farm and construction machinery.
The benchmark S&P 500 and the tech-heavy Nasdaq posted their first weekly declines this month on concerns over higher stock market valuations, and expectations of rising inflation led to fears of a short-term pullback in equities.
For the week, the Dow rose 0.1% while the S&P 500 fell 0.7% and the Nasdaq slid 1.6% as big tech sold off.
Bank of America (NYSE:BAC) expects a more than 10% pullback in stocks, which are trading at more than 22 times 12-month forward earnings, the most expensive since the dot-com bubble of the late 1990s.
"What we saw (this week) represents a market that is tired and may not do very much. So we are headed for some sort of a pullback, but I don't think we're there just yet," said Peter Cardillo, chief market economist at Spartan Capital Securities in New York.
On the economic front, data showed IHS Markit's flash U.S. composite PMI, which tracks the manufacturing and services sectors, inched up to 58.8 in February.
Applied Materials Inc (NASDAQ:AMAT) was among the top boosts to both the Nasdaq and the S&P 500, rising 5.3% to $119.46, after it forecast second-quarter revenue above market expectations. Demand for its semiconductor manufacturing tools has picked up during a global shortage of semiconductors.
Advancing issues outnumbered declining ones on the NYSE by a 1.87-to-1 ratio; on Nasdaq, a 2.14-to-1 ratio favored advancers.
The S&P 500 posted 51 new 52-week highs and no new lows; the Nasdaq Composite recorded 223 new highs and nine new lows.
(This story fixes typographical error in headline)