* Intel wins with $ 20 billion chip expansion announcement
* GameStop falls apart with plans to sell shares
* Energy stocks jump 3% as oil prices recover (adds mid-afternoon prices, analysts comment)
By Herbert Lash
NEW YORK, March 24 (Reuters) – The S&P 500 and Dow rose on Wednesday as financial and industrial stocks increased, with Federal Reserve Chairman Jerome Powell and Treasury Secretary Janet Yellen expressing optimism about the prospect of recovery from the coronavirus pandemic.
The comments of the two top US economic officials reflected what they told Congress the day before, with Powell saying on Wednesday that the most likely case is that 2021 will be “a very, very strong year”.
The main Wall Street indices rose and fell this week, with falling bond yields driving technology stocks to rise, while the energy and financial stocks that rebounded this year with the growing economic outlook were sold.
The ongoing rotation can be seen in a 0.8% gain in undervalued shares and a 0.5% fall in growth shares.
The 10-year yield fell to 1.617%, from 1.638% on Tuesday.
Investors focused on yielding the 10-year benchmark Treasury note, pondering whether there is room for long-term interest rates, said David Kelly, chief global strategist at JPMorgan Asset Management. “We are in a moment of calm here. We know that the economy is prepared to start to really accelerate in the second quarter,” said Kelly. “But we haven’t seen that acceleration yet, so that’s what we are hoping for.”
Adding to the bullish momentum, the data showed that US manufacturing activity increased in early March, amid strong growth in new orders. But supply chain disruptions continued to put cost pressures on manufacturers, keeping the fear of inflation in focus.
“Everyone is optimistic about the prospects for a recovery now,” said David Yepez, a leading equity analyst and portfolio manager at Exencial Wealth Advisors. “For the market to hit bottom, we need to be more afraid, and I don’t feel that the market is afraid now.”
The financial and industrial sectors rose more than 1% each, while energy jumped more than 3%, as oil prices rebounded from a 6% drop in the last session.
By 14h33 EDT, the Dow Jones Industrial Average rose 179.06 points, or 0.55%, by 32,602.21, the S&P 500 gained 5.8 points, or 0.15%, to 3,916.32 and the Nasdaq Composite fell 138.28 points, or 1.05%, to 13,089.42.
Apple Inc, Tesla Inc and Facebook Inc led the declines in the S&P 500.
Intel Corp retreated 1.2% after previous gains with the company in its efforts to expand chipmaking capacity, announcing plans to spend up to $ 20 billion to build two factories in Arizona and open its factories to external customers .
US listed Taiwan Semiconductor shares fell 3.9%, while semiconductor equipment manufacturers Lam Research Corp, Applied Materials Inc and ASML Holding rose between 4% and 6.5%. Applied Materials was the biggest boost in the S&P 500.
Bitcoin gained 2.5% after Tesla founder Elon Musk said the company’s electric vehicles can now be purchased using bitcoin and the option will be available outside the United States later this year.
GameStop Corp fell 22% after the video game retailer said it could profit from a meteoric rise in its stock prices to finance its e-commerce expansion.
Early issues outnumbered declining issues on the NYSE by 1.35 to 1; on the Nasdaq, a ratio of 1.85 to 1 favored the declines.
The S&P 500 recorded 15 new 52-week highs and no new lows; the Nasdaq Composite recorded 39 new highs and 111 new lows. (Reporting by Herbert Lash in New York Additional reporting by Devik Jain and Medha Singh in Bengaluru Editing by Maju Samuel and Matthew Lewis)