The day saw continuing rotation out of tech and into energy and consumer discretionary, triggered by the Fed’s statement supporting the maintenance of accommodative monetary policy pinning interest rates to near zero until inflation is at 2 percent. The Dow was also boosted a good 90 points by the recent Berkshire Hathaway major investments in Verizon and Chevron. There was also a strong rebound in retail sales though concerns remain about the Fed policy and stimulus package stoking inflation. Volume came in at 14.3 billion vs the 4-week average of nearly 16 billion. 

WED  FEBRUARY 17, 2021  6:24 PM 

Nasdaq ends lower as tech slides; inflation concerns weigh

By April Joyner

DJ: 31,522.75  +64.35        NAS: 14,047.50  -47.98         S&P: 3,932.59  -2.24        2/16

DJ: 31,613.02  +90.27        NAS: 13,965.50  -82.00         S&P: 3,931.33  -1.26        2/17

NEW YORK (Reuters) - The Nasdaq closed lower while the S&P 500 was little changed on Wednesday as investors rotated out of technology shares and concerns about inflation added some pressure on stocks.  The Dow Jones Industrial Average rose, however, aided in part by gains in shares of Verizon Communications Inc and Chevron Corp. Those stocks gained after Warren Buffett’s Berkshire Hathaway Inc disclosed major investments in the companies on Tuesday. Verizon shares climbed 5.2%, and Chevron shares advanced 3%.  Technology shares led losses on the S&P 500 and Nasdaq. Apple Inc, PayPal Holdings Inc and Nvidia Corp weighed most on both indexes. The S&P 500 tech index ended 1% lower.

Conversely, energy rose 1.5% to lead gains among S&P 500 sectors as a halt in Texas oil production boosted crude prices. A strong rebound in U.S. retail sales helped consumer discretionary stocks advance 0.7%.  The S&P 500 and the Nasdaq pared losses while the Dow added to gains after the release of minutes from the Federal Reserve’s January policy meeting.  All of the meeting’s participants supported the decision to maintain an accommodative monetary policy. The Fed has pledged to pin interest rates near zero until inflation rises to 2% and looks set to exceed that goal.  “The market is accurately reflecting the combination of continued low interest rates and a continued accomodative Fed,” said Oliver Pursche, president of Bronson Meadows Capital Management in Fairfield, Connecticut.

Yet the Fed’s accomodative stance, coupled with President Joe Biden’s proposed $1.9 trillion package for pandemic relief, has some analysts warning of a coming surge in inflation. As a result, some investors have worried that the Fed may have to change course sooner than expected.  Those fears, which have been bolstered by a sharp rise in benchmark Treasury yields, have contributed to recent market declines, with investors taking profits from market-leading technology stocks.  Inflation pressures may force the Fed to revise its policy in the future, said Michael O’Rourke, chief market strategist at JonesTrading in Stamford, Connecticut. But, he added, “It’s a high threshold we have to cross in order to get them to react.”

The Dow Jones Industrial Average rose 90.27 points, or 0.29%, to 31,613.02, the S&P 500 lost 1.26 points, or 0.03%, to 3,931.33 and the Nasdaq Composite dropped 82.00 points, or 0.58%, to 13,965.50.

Wells Fargo & Co shares jumped 5.2% after a report said the lender won Fed acceptance for its proposal to overhaul its risk management and governance.  U.S.-listed shares of Shopify Inc slid 3.3% after the Canadian e-commerce software giant hinted at slower revenue growth in 2021 as vaccine rollouts encourage people to return to stores after a year marked by an upsurge in online shopping.

Declining issues outnumbered advancing ones on the NYSE by a 1.42-to-1 ratio; on Nasdaq, a 1.60-to-1 ratio favored decliners.  The S&P 500 posted 26 new 52-week highs and no new lows; the Nasdaq Composite recorded 177 new highs and 10 new lows.

Volume on U.S. exchanges was 14.31 billion shares, compared with the 15.99 billion average for the full session over the last 20 trading days.