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REFILE-US STOCKS-Wall Street closes flat as cyclicals shine, big tech falls

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Herbert Lash
·3 min read
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(Fixes typographical error in headline)

* Applied Materials, Catepillar hit record highs

* More rotation out of big tech into cyclicals

* Financial, material, energy, industrial sectors gain

By Herbert Lash

NEW YORK, Feb 19 (Reuters) - Stocks on Wall Street closednear break-even on Friday as investors sold technology sharesthat have rallied through the pandemic and rotated into cyclicalstocks set to benefit from pent-up demand once the coronaviruspandemic is subdued.

Industrials led rising sectors in the S&P 500,spurred by a 9.9% surge in Deere & Co and Caterpillar's5.0% gain to an all-time peak of $211.40 a share.Financials, materials and energy,along with industrials, rose more than 1%.

The S&P 1500 airlines index jumped 3.5%, withpost-pandemic travel in focus.

The stay-at-home winners, including Microsoft Corp,Facebook Inc, Alphabet's Google and Netflix Inc, fell in a trend seen for most of the week. Amazon.comInc also fell, as investors sold the leaders in the bigrally since last March.

Value stocks rose 0.6% while growth fell 0.6%.Advancing stocks led declining shares by about a 2:1 ratio.

A battle continues between tech-led growth stocks andcyclicals, companies that are heavily affected by economicconditions, said Tim Ghriskey, chief investment strategist atInverness Counsel in New York.

"When the economy is roaring, they're roaring. When theeconomy is weakening, they're weakening," Ghriskey said ofcyclicals. "The economy will roar, at least for a period oftime. There's huge pent-up demand, whether just for travel orgoing back to work."

The Dow Jones Industrial Average edged up 0.98points, or 0%, to 31,494.32 and the Nasdaq Compositeadded 9.11 points, or 0.07%, to 13,874.46. The S&P 500dropped 7.26 points, or 0.19%, to 3,906.71.

Volume on U.S. exchanges was 13.47 billion shares.

Strong earnings, progress in vaccination rollouts and hopesof a $1.9 trillion federal coronavirus relief package helpedU.S. stock indexes hit record highs at the start of the week.

The Dow hit an all-time intraday peak, led by Caterpillar,after Deere raised its 2021 earnings forecast. Deere reportedprofit more than doubled in the first quarter on rising demandfor farm and construction machinery.

The benchmark S&P 500 and the tech-heavy Nasdaq posted theirfirst weekly declines this month on concerns over higher stockmarket valuations, and expectations of rising inflation led tofears of a short-term pullback in equities.

For the week, the Dow rose 0.1% while the S&P 500 fell 0.7%and the Nasdaq slid 1.6% as big tech sold off.

Bank of America expects a more than 10% pullback in stocks,which are trading at more than 22 times 12-month forwardearnings, the most expensive since the dot-com bubble of thelate 1990s.

"What we saw (this week) represents a market that is tiredand may not do very much. So we are headed for some sort of apullback, but I don't think we're there just yet," said PeterCardillo, chief market economist at Spartan Capital Securitiesin New York.

On the economic front, data showed IHS Markit's flash U.S.composite PMI, which tracks the manufacturing and servicessectors, inched up to 58.8 in February.

Applied Materials Inc was among the top boosts toboth the Nasdaq and the S&P 500, rising 5.3% to $119.46, afterit forecast second-quarter revenue above market expectations.Demand for its semiconductor manufacturing tools has picked upduring a global shortage of semiconductors.

Advancing issues outnumbered declining ones on the NYSE by a1.87-to-1 ratio; on Nasdaq, a 2.14-to-1 ratio favored advancers.

The S&P 500 posted 51 new 52-week highs and no new lows; theNasdaq Composite recorded 223 new highs and nine new lows.(Reporting by Herbert Lash; additional reporting by Devik Jainand Shreyashi Sanyal in Bengaluru; editing by Shounak Dasgupta,Jonathan Oatis and David Gregorio)