(Reuters) – The Dow rose 1%, the S&P 500 rose and the Nasdaq closed lower on Monday as investors extended a rotation into value stocks of heavyweight tech names while listening to news of progress on one US Tax Aid Act waited.
The Nasdaq, which hit record highs, was dragged down by Microsoft Corp (MSFT.O), Amazon.com Inc (AMZN.O) and Facebook Inc (FB.O).
Value stocks that have tended to outperform growth due to a recession have seen a surge in recent days. The Russell 1000 value .RLV index rose 0.9% on Monday while the Russell 1000 growth index .RLG fell 0.5%.
"Part of the reason the S&P 500 has been withheld is because we are seeing further rotation in value and away from growth," said Paul Nolte, portfolio manager at Kingsview Investment Management in Chicago. "That is holding back the S&P because it is so heavily dominated by Big Tech."
Similar rotations in the past few years haven't lasted long, he said, and at this point, "I see this as a correction to growth rather than people giving up stocks."
Betting on a potential coronavirus vaccine, historic tax and financial assistance, and more recently a better-than-expected earnings season in the second quarter have brought the S&P 500 close to its record high in February.
The Dow Jones Industrial Average .DJI rose 357.96 points, or 1.3%, to 27,791.44, the S&P 500 .SPX rose 9.19 points, or 0.27%, to 3,360.47, and the Nasdaq Composite. IXIC fell 42.63 points, or 0.39%, to 10,968.36.
US President Donald Trump signed executive orders that partially restored improved unemployment benefits after talks between the White House and top Democrats in Congress about fresh impetus collapsed last week.
US Treasury Secretary Steven Mnuchin said in an interview with CNBC on Monday that the Trump administration and Congress could reach an agreement as early as this week if the Democrats were "sensible".
Energy and industry, which were among the worst performers this year, rose while technology and communications services declined.
(CHART: Three Month Spread Between Russell 100 Growth And Value Indices – Here)
Among the individual moving companies was Eastman Kodak Co (KODK.N) declined 27.9% after the US government's $ 765 million loan agreement for the manufacture of pharmaceutical ingredients was suspended on "recent allegations of misconduct."
Microsoft Corp (MSFT.O) fell 2% as sources said its offer to carve out portions of TikTok from its Chinese owner ByteDance will be a technically complex undertaking.
Progress issues outperformed declines on the NYSE by a ratio of 2.45 to 1. On Nasdaq, a ratio of 1.56 to 1 favored the advanced.
The S&P 500 posted 40 new 52-week highs and no new lows. The Nasdaq Composite made 103 new highs and 11 new lows.
The volume on the US exchanges was 9.76 billion shares, compared to the average of 10.30 billion for the entire session over the last 20 trading days.
Additional reporting by Ambar Warrick and Medha Singh in Bengaluru, editing by Uttaresh.V and Tom Brown
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