US STOCKS-Nasdaq closes higher with technology stocks back in favor

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(Updates to close, adds commentary)
By Sinéad Carew
Nov 11 (Reuters) - The Nasdaq closed higher on Wednesday as
investors switched back to technology stocks and away from
economically sensitive sectors as they weighed COVID-19 vaccine
progress against a virus surge and likely timing for a economic
rebound.
After falling sharply for two days, the tech-heavy Nasdaq
.IXIC was boosted by "stay-at-home" stocks such as Microsoft
MSFT.O , Amazon.com Inc AMZN.O , Apple Inc AAPL.O and
Netflix Inc NFLX.O , which advanced in Wednesday's session.
Monday's encouraging late-stage coronavirus vaccine trial
data had prompted a two-day rotation away from technology stocks
into sectors that typically outperform coming out of a recession
such as industrials .SPLRCI , materials .SPLRCM and energy
.SPNY .
But investors changed gears Wednesday to buy the S&P growth
index .IGX , which includes the less economically sensitive
technology stocks, and sell the value index .IVX , which
includes banks and energy stocks.
"We'll probably have these fits and starts of the rotation
until we get into the spring," said Shawn Snyder, head of
Investment Strategy at Citi Personal Wealth Management. "There's
still really strong earnings for these technology companies and
you're still facing a potential surge in COVID cases through the
winter months and renewed restrictions and lockdowns."
Also, the top U.S. infectious disease specialist urged
caution until vaccines are distributed, as California and states
across the U.S. Midwest and the Northeast tightened restrictions
aimed at containing the virus spread. As the restrictions were announced, shares of retailers such
as Macy's M.N fell along with restaurant owners including
Darden Restaurants DRI.N . The small cap S&P 600 consumer
discretionary index .SPSMCD also lost ground.
"To think the style we've been living our lives in for the
last nine months is suddenly going to change is a bit
optimistic. Its going to take longer," said Citi's Snyder.
Unofficially, the Dow Jones Industrial Average .DJI fell
6.18 points, or 0.02%, to 29,414.74, the S&P 500 .SPX gained
26.8 points, or 0.76%, to 3,572.33 and the Nasdaq Composite
.IXIC added 227.52 points, or 1.97%, to 11,781.37.
"The story of the week and what's persisting today is the
almost see-saw, barbell view in the market between growth, tech
and stay-at-home investments versus the more cyclical value
investments that are tied to the broader rebound and recovery in
the economy," said Craig Fehr, investment strategist at Edward
Jones in St. Louis, Missouri.
"The broad view is the greater optimism for the longer term
view of the economy, post vaccine, post pandemic. We're seeing a
little bit of that shine come off it today."
Markets, which also got a boost after Democrat Joe Biden was
declared the projected the winner of the U.S. election, have
shrugged off legal challenges from President Donald Trump as no
evidence of problems with votes has so far been produced.
The Democratic Party retained control of the U.S. House of
Representatives with a lower majority, the Associated Press
reported. As a result investors are now focused on whether they
can wrestle Senate control from Republicans, which will not be
decided until special elections in January.
Democrats may not be able to win enough votes for their
larger economic stimulus plan if Republicans retain a Senate
majority. Lyft Inc LYFT.O rose after the ride-hailing app said it
was working on a new service to take a slice of the burgeoning
food-delivery market, as it works to make up for a drop in
quarterly revenue. The Philadelphia SE chip index .SOX gained ground after
suffering sharp losses on Tuesday.