S&P 500 fails to match Dow with back-to-back record highs

The S&P 500 was unable to match the Dow Jones Industrial Average by closing at a record high for a second consecutive session on Friday, as tech stocks weighed on the broader market and erased the morning’s gains.

And with the closing bell now having rung, a major shake-up of the S&P 500’s sectors takes place, including a dramatic overhaul of the existing telecommunications sector.

A key milestone this week was the Dow on Thursday taking out its previous January peak to join the S&P 500 to close at a record high. On Friday, the broader benchmark finished less than 0.1 per cent lower — its first drop in four sessions — and was unable to join the blue-chip gauge to post consecutive record closing highs.

The S&P 500’s best-performing sector today was telecommunications services, up 0.1 per cent, followed by energy, up 0.8 per cent, and utilities, up 0.4 per cent. The weakest sectors were information technology, down 0.6 per cent, financials and consumer cyclicals each down 0.3 per cent.

The diverging performance of the telcos and tech sectors reflected the anticipated changes to the Global Industry Classification Standard (GICS) classification system, the biggest such overhaul since its inception in 1999. Index provider S&P Dow Jones Indices is moving 16 stocks including Facebook, Alphabet and Netflix from the information technology into a rebadged communication services sector.

The Dow closed about ⅓ of 1 per cent higher at a record on Friday. The Nasdaq Composite fell 0.5 per cent, with semiconductor makers performing poorly after Micron Technology’s warned on the impact of the US’s tariffs on Chinese imports and forecast revenue and earnings for the current quarter that were weaker than analysts expected.

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The US’s trade war with China remained a constant backdrop this week, but sentiment improved after the levies imposed by Washington on $200bn of Chinese imports were not as steep as initially expected.

This week’s sell-off in government bonds went into reverse on Friday, but could easily find its feet again next week ahead of an expected interest rate rise from the Federal Reserve on Wednesday. The yield on the benchmark 10-year US Treasury was 1.3 basis points lower at 3.0646 per cent. Bond prices rise as yields fall.

The dollar firmed, largely thanks to a weaker pound that reacted poorly to comments from Theresa May, UK prime minister, on the fraught state of Brexit talks. The DXY index, which tracks the buck against a weighted basket of global peers like the pound, was up 0.3 per cent to 94.188.


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