Dow, S&P 500 supported by defensives after bruising selloff

A Wall Street sign is pictured outside the New York Stock Exchange in New York, October 28, 2013. REUTERS/Carlo Allegri

  • Dow top gainer among Wall Street indexes; Nasdaq underperforms
  • Boeing rises on hopes of China lifting of 737 MAX ban
  • Indexes: Dow rises 0.30%, S&P up 0.16%, Nasdaq down 0.26%

Sept 29 (Reuters) – Gains in defensive shares and Boeing helped the Dow and the S&P 500 index recover some lost ground on Wednesday after concerns over inflation and rising Treasury yields sparked one of Wall Street’s worst selloffs this year.

Eight of the 11 major S&P sectors advanced, with healthcare (.SPXHC), consumer staples (.SPLRCS), utilities (.SPLRCU) and real estate (.SPLRCR) rising between 0.7% and 1.6%.

Investors stuck to relatively stable sectors as concerns over economic growth and a possible government shutdown rattled sentiment.

Federal Reserve Chairman Jerome Powell on Wednesday also warned of economic uncertainty in the medium-term, and that inflation was likely to remain elevated this year. read more

A 3.3% jump in shares of Boeing Co (BA.N) also lifted the blue-chip Dow (.DJI) and the benchmark S&P 500 (.SPX).

Boeing said its 737 MAX test flight for China’s aviation regulator last month was successful and the planemaker hopes a two-year grounding will be lifted this year. read more

The Nasdaq lagged its peers as major technology stocks including Alphabet Inc (GOOGL.O) and Facebook (FB.O) remained under pressure from relatively high Treasury yields. Expectations of higher inflation are likely to keep yields elevated this year.

“I think there was a very rapid adjustment to what was a more hawkish Fed (last week) and the realization that inflation might be a little stickier than transitory,” said Bob Shea, chief executive officer at TrimTabs Asset Management in New York.

“We are going to have short-term volatility around dysfunction of our very divided government. In the end they usually are forced to do the right thing, but watching that typically is an uncomfortable and volatile time period for the market.”

The U.S. Congress has just two days left before the federal government begins shutting many of its operations unless Democrats manage to pass a bill providing new funding for the fiscal year that begins on Friday. read more

JPMorgan Chase & Co (JPM.N) Chief Executive Jamie Dimon also cautioned a U.S. credit default would be a “potentially catastrophic” event. read more

The S&P 500 index is now set to break its seven-month winning streak as fears about China Evergrande’s default, potentially higher corporate taxes and a sooner-than expected tapering by the Fed clouded investor sentiment in what is usually a seasonally weak month.

At 12:27 p.m. ET, the Dow Jones Industrial Average (.DJI) was up 102.30 points, or 0.30%, at 34,402.29, the S&P 500 (.SPX) was up 6.90 points, or 0.16%, at 4,359.53, and the Nasdaq Composite (.IXIC) was down 37.51 points, or 0.26%, at 14,509.17.

Among other movers, Dollar Tree Inc (DLTR.O) jumped 15% after the discount retailer boosted its share buyback plan to a total of $2.5 billion.

Advancing issues outnumbered decliners by a 1.42-to-1 ratio on the NYSE. Declining issues outnumbered advancers for a 1.13-to-1 ratio on the Nasdaq.

The S&P index recorded three new 52-week highs and two new lows, while the Nasdaq recorded 21 new highs and 108 new lows.

Reporting by Devik Jain in Bengaluru; Editing by Saumyadeb Chakrabarty and Maju Samuel

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