NEW YORK, Jan 12 Reuters The benchmark SP 500 closed barely higher on Tuesday while shares in smaller companies soared as investors favored more economically sensitive market segments as they bet on a recovery in 2021.
U.S. Treasury yields climbed and the small cap Russell 2000 outperformed throughout the session as did socalled cyclical sectors such as financials and energy, which are heavily dependent on a strong economy for growth.
Traders were betting that incoming U.S. President Joe Biden, a Democrat, would usher in heftier fiscal stimulus and that a ramp up in distribution of coronavirus vaccines would boost the economy, according Michael James, managing director of equity trading at Wedbush Securities in Los Angeles.
The financials and cyclicals have been the stars to start the year, said James.With the Bidens victory comes stimulus expectations
Some investors said they were cautious ahead of earnings season while others monitored developments in Washington after supporters of outgoing U.S. President Donald Trump stormed the Capitol last week.
As Democrats moved to impeach Trump for inciting the deadly rampage last week, Trump on Tuesday denied wrongdoing saying that his public comments on the day of the attack were totally appropriate.
Also, the Washington Post reported that an FBI office in Virginia issued an internal warning the day before the Capitol invasion that extremists were planning to come to Washington and were talking of war.