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US STOCKS-Wall Street supported by rise in cyclical stocks

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Herbert Lash
·3 min read
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* Financial, material, energy, industrial sectors gain

* Applied Materials hits record high on strong revenueforecast(Adds dateline, byline, updates with afternoon prices)

By Herbert Lash

NEW YORK, Feb 19 (Reuters) - Stocks on Wall Street tradednear breakeven on Friday as investors sold technology shares androtated into economically sensitive cyclical stocks inanticipation the U.S. economy will boom on pent-up demand oncethe coronavirus pandemic is subdued.

Industrials led rising sectors in the S&P 500,spurred by a 10.2% surge in Deere & Co and Caterpillar's5.3% gain to an all-time peak. Financials,materials and energy, along with industrials,rose more than 1%.

The S&P 1500 airlines index also soared 3.8%,with post-pandemic travel in focus.

Stay-at-home winners Microsoft Corp, Facebook Inc, Alphabet's Google and Netflix Incfell between 0.4% and 2.3% in a trend seen for most of the week.Apple Inc and Amazon.com Inc also fell.

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. "Theeconomy will roar, at least for a period of time. There’s hugepent-up demand, whether just for travel or going back to work."

By 2:33PM ET, the Dow Jones Industrial Average hadrisen 16.28 points, or 0.05%, to 31,509.62, the S&P 500lost 6.4 points, or 0.16%, to 3,907.57 and the Nasdaq Compositeadded 1.02 points, or 0.01%, to 13,866.37.

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 a fresh intraday peak, led by Caterpillar, afterDeere raised its 2021 earnings forecast. Deere reported profitmore than doubled in the first quarter on rising demand for farmand construction machinery.

The benchmark S&P 500 and the tech-heavy Nasdaq headedtoward their first weekly declines this month on concerns overhigher stock market valuations, and expectations of risinginflation led to fears of a short-term pullback in equities.

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.

Meanwhile, data showed IHS Markit's flash U.S. compositePMI, which tracks the manufacturing and services sectors, inchedup to 58.8 in February.

Applied Materials Inc rose 5.6% and was among thetop boosts to both the Nasdaq and the S&P 500 after it forecastsecond-quarter revenue above market expectations. Demand for itssemiconductor manufacturing tools has picked up during a globalshortage of semiconductors.

Advancing issues outnumbered declining ones on the NYSE by a2.02-to-1 ratio; on Nasdaq, a 2.30-to-1 ratio favored advancers.

The S&P 500 posted 45 new 52-week highs and no new lows; theNasdaq Composite recorded 198 new highs and seven new lows.(Reporting by Herbert Lash; additional reporting by Devik Jainand Shreyashi Sanyal in Bengaluru; editing by Shounak Dasguptaand Jonathan Oatis)