Wall St. springs up on defensive bets, notches 2nd straight weekly gains

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Wall St. springs up on defensive bets, notches 2nd straight weekly gains

On Friday, all three key indices of Wall Street had reported modest gains with benchmark S&P 500 and tech-heavy Nasdaq setting record-closing highs as investors kept pouring heavy-money on a raft of riskier assets such as energy and materials in expectation of a trillion-dollar pandemic stimulus bill in a near term while dumping mega-cap tech stocks.

On top of that, in alignment with the gains in the day’s Wall Street, MSCI’s gauge for global equity indices that keeps track of 49 stock exchanges across the globe, stretched out its blistering rally into a straight tenth day in a row and had spiked to an all-time closing high over investors’ optimism of an earlier-than-anticipated economic recovery.

In point of fact, Wall Street had opened up the session in a slightly downbeat tenure, mostly fizzled out following losses of mega-cap tech stocks, however, as the day progressed, investors seemingly oscillated their interests on cyclicals and under-valued stocks while ditching out growth-oriented assets which appeared to have immunized all three key indices of Wall Street from the pandemic’s fiscal fallouts for more than a year.

Wall Street clocks second straight weekly gains

On top of that, latest leg of blowout rallies in the key indices of Wall Street was rooted back a couple of weeks earlier when a Democrat-led US Senate had agreed to pass a budgetary bill which in effect would enable the US President Joe Biden to push forth with a $1.9 trillion in pandemic stimulus package without supports from the Republican lawmakers.

Citing statistics, as energy, cyclicals, financials and material stocks surged on hopes that they would be benefitted following a re-opening of economy, trade-sensitive Dow added 0.09 per cent to 31,458.4, benchmark S&P 500 soared 0.47 per cent to 3,934.83, while tech-heavy Nasdaq rose 0.5 per cent to wrap up the session at 14,095.47 following a late-session rally.

Meanwhile, addressing to a high-growth environment in the Wall Street which in effect would likely to benefit cyclicals and under-valued riskier assets, a managing member and Chairman of hedge fund Great Hill Capital LLC in New York, Thomas Hayes said, “We’re under-estimating the lag effect of all the money in the system as more and more vaccinations are delivered and as more of the country reopens from business shutdowns.

We are continuing this rotation that would be consistent with the new business cycle, and as (bond) yields go up, value and cyclicals will lead.