Wall St inches higher as tech stocks tank

The ASX is set to open lower after the Dow edged higher, although tech stocks and bonds dropped.

Investors are selling tech stocks given President-elect Trump’s plans for tighter limits on trade and immigration. Picture: AP Photo/Richard Drew.

Bank shares surged while tech and dividend stocks fell overnight, leaving major US indexes little changed after their election-week rally.

In Europe, markets climbed as investors hoped president-elect Trump might not be as confrontational as earlier feared.

The Australian share market is set to follow Wall St into the red, with ASX futures down 17 points at 8.15am (AEDT).

The Dow industrials gained 21 points, or 0.1 per cent, to 18869. The S&P 500 slipped less than 0.1 per cent and the Nasdaq Composite fell 0.4 per cent.

The Dow Jones Industrial Average added 5.4 per cent over election week, its biggest one-week jump since December 2011.

Investors have been shifting their money since Donald Trump’s surprise victory last Tuesday. Some of the most popular bets have reflected expectations of stronger growth and higher inflation, sending financial stocks and government bond yields higher.

As bonds sold off, so did dividend-paying stocks like utilities and telecommunications companies, which investors bought this year for steady income amid ultralow interest rates.

Technology stocks, another recent winner, also slumped. Tech shares in the S&P 500 rose 12 per cent in the third quarter but have fallen more than 3 per cent since Sept. 30, with much of that decline coming since the election.

“Tech has really been running the market, now other areas are getting their day in the sun,” said Diane Jaffee, senior portfolio manager at TCW Group

Mr Trump has also advocated for tighter limits on trade and immigration, which could spell changes for an industry that gets much of its revenue from overseas and prizes high-skilled immigrants.

Bank shares continued to surge. Many investors expect interest rates to rise, which should help lenders’ profits by widening the gap between what they pay on deposits and what they charge on loans. Bank stocks have also benefited from bets that Mr Trump would scale back on regulation.

The KBW Nasdaq Bank index of large US commercial lenders added another 3.2 per cent Monday, and are up 13 per cent over the past week.

J.P. Morgan Chase and Goldman Sachs Group were among the biggest gainers in the Dow Jones Industrial Average, which was little changed overall Monday.

“Investors have automatically assumed that a Trump administration means higher growth, higher spending and higher inflation -- all of which can be good for equity markets,” said Sean Lynch, co-head of global equity strategy at Wells Fargo.

“But we can’t just go automatically there,” he added. “There are steps that could be painful as they try to reinvigorate the country. His policies may not have the intended impact or they may be implemented in a way that’s not as beneficial as people assume.”

As bonds sold off again Monday, the yield on the 10-year Treasury note rose to 2.224 per cent from 2.118 per cent Thursday. The US bond market was closed Friday.

“This is a reflation environment,” said Sergio Trigo Paz, head of emerging-markets fixed income at BlackRock. “It’s very negative for fixed income across the board.”

With many investors expecting the Federal Reserve to raise interest rates next month, the dollar continued to strengthen. The WSJ Dollar Index, which measures the US currency against 16 others, rose 0.9 per cent.

Dow Jones