* Financials rebound after sell-off
* Energy shares up the most among 11 major S&P sectors
* Dow up 0.85%, S&P 500 up 0.56%, Nasdaq up 0.27%
(Updates to mid-afternoon, changes byline)
By Chuck Mikolajczak
NEW YORK, Aug 28 (Reuters) - U.S. stocks advanced on
Wednesday, as gains in financial and energy shares helped
equities recover from initial declines, but investors remained
cautious about the potential for another flare-up in U.S.-China
trade tensions.
The financial sector .SPSY was up 1.06%, clawing back some
of the losses from the previous session triggered by a deepening
of the U.S. Treasury yield curve inversion, which often precedes
a recession. Gains in the benchmark S&P 500 index .SPX were also
supported by a 1.75% jump in energy .SPNY stocks after
industry data showed a fall in stockpiles of U.S. crude,
boosting oil prices. The two have been the worst performing of the 11 major S&P
sectors in August.
"When you look at both financials and energy being among the
worst on a relative strength basis, you could say it is a dead
cat bounce," said Sam Stovall, chief investment strategist at
CFRA Research in New York.
Investors took some solace in the lack of new developments
on the trade front, although the U.S. Trade Representative's
office on Wednesday reaffirmed President Donald Trump's plans to
impose an additional 5% tariff on a list of $300 billion of
Chinese imports starting on Sept. 1 and Dec. 15. "As the hangman says, no noose is good noose. We are not
really hearing anything from the Chinese or from economic data
that could really throw us off balance," said Stovall.
Next week, investors will look towards the monthly jobs
report and manufacturing data which could guide expectations on
the likelihood of another rate cut from the Federal Reserve at
its mid-September meeting.
The Dow Jones Industrial Average .DJI rose 220.28 points,
or 0.85%, to 25,998.18, the S&P 500 .SPX gained 16.21 points,
or 0.56%, to 2,885.37 and the Nasdaq Composite .IXIC added
20.77 points, or 0.27%, to 7,847.71.
Another factor potentially proving a lift to stocks was the
drop in the 30-year U.S. Treasury yield to below that of the S&P
500 dividend yield, making equities a more attractive income
alternative.
Technology stocks .SPLRCT dipped 0.12%, pressured by
declines in shares of Microsoft Corp MSFT.O and Autodesk Inc
ADSK.O .
Shares of the AutoCAD software maker slid 6.9%, the most on
the S&P 500, after the company cut its full-year earnings
forecast.
Shares of Tiffany & Co TIF.N rose 3.6% after the luxury
jeweler reported quarterly earnings above analysts' estimates.
Coty Inc COTY.N rose 5.1% after the cosmetics maker raised
its full-year revenue forecast, betting on a multi-year
turnaround plan that involves increased investments in
advertising and cost cuts. Hewlett Packard Enterprise Co's HPE.N shares added 3.4%
after the company beat profit estimates and raised its 2019
adjusted earnings forecast. Advancing issues outnumbered declining ones on the NYSE by a
2.66-to-1 ratio; on Nasdaq, a 2.31-to-1 ratio favored advancers.
The S&P 500 posted 7 new 52-week highs and 38 new lows; the
Nasdaq Composite recorded 21 new highs and 144 new lows.
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S&P dividend yield vs 30-yr U.S. Treasury https://tmsnrt.rs/2zqVAu7
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