The S&P 500 closed higher on Wednesday for the ninth time in the past 10 sessions, with defensive and value stocks taking their turns to lead the gains after data showed U.S. private payrolls expanded last month, but at a much slower pace than expected.
The indexes gained steam in afternoon trading and hit session highs in the final half hour.
The Federal Reserve’s “Beige Book” report showed a modest increase in activity for U.S. businesses and an increase in employment through late August, while economic growth remained sluggish in parts of the country.
The blue-chip Dow edged closer to its Feb. 12 record high, coming in just 1.6% below the milestone while the tech-heavy Nasdaq, which closed the session almost 23% above its pre-crisis high, rose at a slower pace on Wednesday.
While much of the rally from March lows has already been fueled by Federal Reserve support, Lindsey Bell, chief investment strategist at Ally Invest, said investors may still be digesting the central bank’s policy announcement last week which indicated continued support.
“What you’re seeing today is a bit of a rotation after yesterday’s blockbuster day,” said Bell. “Unless you really think tech is going to completely crash it can take a breather and allow some of the other value-oriented and cyclical sectors to take the reins for a while.”
The Dow Jones Industrial Average rose 454.84 points, or 1.59%, to close at 29,100.5, the S&P 500 gained 54.19 points, or 1.54%, to 3,580.84 and the Nasdaq Composite added 116.78 points, or 0.98%, to 12,056.44.
In comparison the S&P value index rose 1.8% while the growth index added 1.4%.
The defensive utilities, consumer staples and real estate, which have trailed the broader market this year, were some of the biggest gainers among major S&P sectors on Wednesday, rising between 2% and a little over 3%. Health stocks also closed up 2%.
Financials, a value sector which has also sharply underperformed this year, closed up 1.5% on Wednesday.