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US STOCKS-Wall Street trades flat, but set for weekly gain

Herbert Lash
·3 min read
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* Disney drops after strong run up to results

* PayPal extends rise as brokerages upbeat after investorday

* Energy stocks slide as oil prices drop on demand fears

* Indexes: Dow down, S&P flat, Nasdaq up 0.16%(Adds byline, dateline, afternoon prices)

By Herbert Lash

NEW YORK, Feb 12 (Reuters) - The S&P 500 and Nasdaq tradedsideways on Friday in a tight range, with investors buyingenergy, financial and materials shares and selling big techstocks as they wait for progress on new fiscal aid fromWashington to spur the market to new highs.

The S&P energy sector, financials andmaterials all rose on expectations they will benefitfrom a reopened economy.

Heavyweights Apple Inc, Tesla Inc andMicrosoft Corp, each down, held the major indexes backas they headed for second straight week of gains.

Value and cyclicals outperform in a rising interest rate,higher-growth environment, which the U.S. economy is on the cuspof entering, said Thomas Hayes, chairman and managing member ofhedge fund Great Hill Capital LLC in New York.

"We're under-estimating the lag effect of all the money inthe system as more and more vaccinations are delivered and asmore of the country reopens" from business shutdowns, he said.

"We are continuing this rotation that would be consistentwith the new business cycle, and as (bond) yields go up, valueand cyclicals will lead," Hayes said.

A sharp drop in new COVID-19 cases and hospitalizations inrecent weeks have helped drive markets to new highs, though anear-term pullback could occur from the new coronavirus variantsand potential snags in vaccine distributions.

The latest data showed U.S. consumer sentiment unexpectedlyfell in early February as households remained worried about theeconomy despite expectations for additional fiscal stimulus.

A Reuters poll showed the U.S. economy is expected to reachpre-COVID-19 levels within a year as the proposed $1.9 trillionfiscal bill helps boost economic activity, but it's likely totake more than a year for employment to fully recover.

U.S. President Joe Biden turned to a bipartisan group oflocal officials for support on his $1.9 trillion coronavirusrelief plan to help millions of unemployed workers and forschools to reopen.

The Lipper data late on Thursday showed U.S.-based stockfunds attracted $22.9 billion in the week to Wednesday, thelargest weekly inflow since March 2008.

U.S. stock markets will be closed on Monday on account ofthe U.S. Presidents Day holiday.

By 2:15 p.m. ET, the Dow Jones Industrial Averagefell 62.79 points, or 0.2%, to 31,367.91, the S&P 500lost 0.79 points, or 0.02%, to 3,915.59 and the Nasdaq Compositeadded 0.82 points, or 0.01%, to 14,026.59.

The small-cap index was set to rise for the fifthweek out of six full weeks this year. PayPal Holdings Incrose about 4.2% as several brokerages raised pricetargets on the stock a day after the payments company's investorday call.

Walt Disney Co reported a surprise quarterly profit.However, its shares fell 1.8% from a record high after a morethan 13% run up to its results over the last two weeks.

Dating app operator Bumble Inc gained 14%, a dayafter a stellar debut sent its shares up more than 75%.

Cannabis company Aphria Inc gained 7% after nearlyhalving in value in the prior session.

Advancing issues outnumbered declining ones on the NYSE by a1.07-to-1 ratio; on Nasdaq, a 1.06-to-1 ratio favored advancers.

The S&P 500 posted 48 new 52-week highs and no new lows; theNasdaq Composite recorded 233 new highs and 13 new lows.

(Reporting by Herbert Lash, additional reporting by Medha Singhin Bengaluru; Editing by Maju Samuel and Diane Craft)