“The main factor in that move between growth and value is COVID and the Delta variant and its impact on the economy,” said Tim Ghriskey, chief investment strategist at Inverness Counsel in New York.
“Over time, we’ve seen the market focus flip flop between these two outlooks for the economy as investors try to grapple with the near-term economic outlook.”
The Dow Transportation index, a barometer of economic health, outperformed the broader market.
A host of economic data showed hints of waning inflation and an ongoing return to economic normalcy, even as supply constraints, complicated by hurricane Ida, hindered factory output.
Import prices posted their first monthly decline since October 2020, in the latest sign that the wave of price spikes has crested, further supporting the Federal Reserve’s position that current inflationary pressures are transitory.
Next week, the Federal Open Markets Committee is due to convene for a two-day monetary policy meeting, which will be closely parsed for signals as to when the central bank will begin to taper its asset purchases.
The graphic below shows major indicators against the Fed’s average annual 2% inflation target.
The Dow Jones Industrial Average rose 247.68 points, or 0.72%, to 34,825.25; the S&P 500 gained 35.74 points, or 0.80%, at 4,478.79; and the Nasdaq Composite added 93.96 points, or 0.62%, at 15,131.72.
While all 11 major sectors in the S&P 500 were green, energy was by far the best performer, benefiting from a jump in crude prices driven by a drawdown in U.S. stocks.
U.S.-listed Chinese stocks extended recent losses, as weak retail sales data pointed to a possible economic slowdown in the mainland, while Beijing’s regulatory overhaul of Macau’s casino industry further dampened appetite for Chinese stocks.
This follows a series of regulatory moves by China against major technology firms, which has wiped out billions in market value this year.
“There’s uncertainty about what China could do – and it would appear to be one thing after another – and that has caused profit taking across the board in Chinese related names,” Ghriskey added.
U.S.-based casino operators Las Vegas Sands Corp, Wynn Resorts Ltd and MGM Resorts International were off between 3% and 8%.
Apple Inc snapped a decline over recent sessions following an adverse court ruling on its business practices, and a lukewarm response to its event on Tuesday where it unveiled updates to its iPhone and other gadgets.
Lending platform GreenSky Inc shot up 53.0% after Goldman Sachs Group Inc said it would buy the company in an all-stock deal valued at $2.24 billion.
Advancing issues outnumbered declining ones on the NYSE by a 2.02-to-1 ratio; on Nasdaq, a 1.46-to-1 ratio favored advancers.
The S&P 500 posted five new 52-week highs and three new lows; the Nasdaq Composite recorded 41 new highs and 95 new lows.