Dow posts closing record high for 2nd day, boosted by banks

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NEW YORK (Reuters) – The Dow Jones Industrial Average scored a record closing high on Tuesday for a second straight day as financial and industrial shares rallied, while the Nasdaq fell.

The S&P 500 was near flat, with declines in shares of big growth names including Tesla (NASDAQ:TSLA) Inc weighing on the index and the Nasdaq Composite.

Energy, financials and industrials were among sectors leading gains in the S&P 500. Helping sentiment, the World Health Organization cited increasing evidence that the coronavirus variant caused milder symptoms than previous variants.

The S&P 500 bank index was also up sharply.

Some strategists said financials and other value-oriented stocks could lead markets in the near term as investors gear up for interest rate hikes from the Federal Reserve by mid-year to curb high inflation. U.S. Treasury yields rose for a second trading day.

Investors are “going to punish growth stocks with high valuations,” said Robert Phipps, a director at Per Stirling Capital Management in Austin, Texas.

“This is a time when defensive stocks and value stocks are likely to outperform.”

The S&P 500 value index jumped, while the S&P 500 growth index was down.

According to preliminary data, the S&P 500 lost 3.17 points, or 0.07%, to end at 4,793.39 points, while the Nasdaq Composite lost 209.55 points, or 1.33%, to 15,623.25. The Dow Jones Industrial Average rose 213.47 points, or 0.58%, to 36,798.53.

Tesla shares fell, a day after jumping more than 13% on stronger-than-expected quarterly deliveries.

The U.S. central bank said last month it would end its pandemic-era bond buying in 2022, signaling at least three interest rate hikes for the year. Minutes from the meeting are expected to be released on Wednesday.

Ford Motor (NYSE:F) Co jumped after the automaker said it would nearly double annual production capacity for its red-hot F-150 Lightning electric pickup to 150,000 vehicles.

Earlier, U.S. manufacturing data for December showed some cooling in demand for goods, but investors took solace in signs of supply constraints easing.