S&P 500 ends higher with financials as Treasury yields jump

A screen displays ICE trading information on the floor of the New York Stock Exchange (NYSE) in New York, U.S., March 21, 2022. REUTERS/Brendan McDermid

NEW YORK, March 25 (Reuters) – The S&P 500 ended higher on Friday as financial stocks rose after the benchmark Treasury yield hit its highest level in nearly three years.

The Nasdaq finished lower, and technology and other big growth names were mostly lower, but they finished session lows after a late-session rally.

For the week, the Nasdaq and S&P 500 posted solid gains of 2% and 1.8%, respectively, and the Dow was nominally higher with a rise of 0.3%.

The S&P 500 financials sector (.SPSY) gave the S&P 500 its strongest boost on Friday, rising 1.3%, while the technology (.SPLRCT) and consumer discretionary (.SPLRCD) sectors gained were the only two major sectors to end lower that day.

Investors are pricing in how aggressive the Federal Reserve will be as it tightens policy after Fed Chairman Jerome Powell said this week that the central bank needed to act “quickly” to tackle high inflation and has raised the possibility of a 50 basis point rate hike. in May.

U.S. Treasury yields surged on Friday, with the benchmark 10-year note hitting near three-year highs, as the market grappled with high inflation and a Federal Reserve that could easily trigger a downturn by aggressively tightening its Politics.

Ten-year Treasury yields were last at 2.492% after rising above 2.50% for the first time since May 2019.

The stock market is moving in a higher rate environment, said Keith Buchanan, portfolio manager at Globalt Investments in Atlanta.

That’s causing bank stocks to outperform, while “adding more pressure on riskier parts of the market,” such as growth stocks, he said.

Higher borrowing rates benefit banks, while higher rates are negative for technology and growth stocks, whose valuations are more dependent on future cash flows.

The Dow Jones Industrial Average (.DJI) rose 153.3 points, or 0.44%, to 34,861.24, the S&P 500 (.SPX) gained 22.9 points, or 0.51%, to 4,543.06 and the Nasdaq Composite (.IXIC) fell 22.54 points, or 0.16%, to 14,169.30.

Shares of growth companies like Nvidia Corp eased after leading a rebound on Wall Street earlier this week.

The utilities sector (.SPLRCU) also rose sharply to a record high as investors favored defensive stocks as the Russian-Ukrainian war still raged after a month.

The sector ended up 1.5% on the day and 3.5% on the week, while the energy sector (.SPNY) ended up 2.3% on the day and was jumped more than 7% over the week following sharp increases in oil prices.

Moscow signaled on Friday that it was scaling back its ambitions in Ukraine to focus on territory claimed by Russian-backed separatists. Read more

Citibank economists expect four 50-basis-point interest rate hikes from the Fed this year, joining other Wall Street banks in forecasting an aggressive tightening path amid the global downturn. galloping inflation. Read more

The U.S. central bank last week raised interest rates for the first time since 2018.

“The market is really macro driven,” said Steve DeSanctis, small-mid cap equity strategist at Jefferies in New York. “The fundamentals of the business don’t really matter.”

Volume on U.S. exchanges was 11.92 billion shares, compared to an average of 14.28 billion for the full session over the past 20 trading days.

Advancing issues outnumbered declining ones on the NYSE by a ratio of 1.08 to 1; on the Nasdaq, a ratio of 1.40 to 1 favored the decliners.

The S&P 500 posted 57 new 52-week highs and five new lows; the Nasdaq Composite recorded 73 new highs and 79 new lows.

Additional reporting by Sinead Carew in New York, Devik Jain and Amruta Khandekar in Bengaluru; Editing by Marguerita Choy

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