US STOCKS-S&P 500 ends with slight gain as small caps favored

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(Updates prices, adds comment)
By Sinéad Carew
NEW YORK, Jan 12 (Reuters) - The benchmark S&P 500 closed
barely higher on Tuesday while shares in smaller companies
soared as investors favored more economically sensitive market
segments as they bet on a recovery in 2021.
U.S. Treasury yields climbed and the small cap Russell 2000
.RUT outperformed throughout the session as did so-called
cyclical sectors such as financials and energy, which are
heavily dependent on a strong economy for growth.
Traders were betting that incoming U.S. President Joe Biden,
a Democrat, would usher in heftier fiscal stimulus and that a
ramp up in distribution of coronavirus vaccines would boost the
economy, according Michael James, managing director of equity
trading at Wedbush Securities in Los Angeles.
"The financials and cyclicals have been the stars to start
the year," said James."With the Biden's victory comes stimulus
expectations"
Some investors said they were cautious ahead of earnings
season while others monitored developments in Washington after
supporters of outgoing U.S. President Donald Trump stormed the
Capitol last week.
As Democrats moved to impeach Trump for inciting the deadly
rampage last week, Trump on Tuesday denied wrongdoing saying
that his public comments on the day of the attack were "totally
appropriate." Also, the Washington Post reported that an FBI office in
Virginia issued an internal warning the day before the Capitol
invasion that extremists were planning to come to Washington and
were talking of "war." Trump's denial and the FBI story, which contradicts
suggestions that the administration did not expect an attack,
"highlight the fact that there's still a lot of issues in this
country and we have a lot of progress to make before we can
really go forward," said Michael O'Rourke, chief market
strategist at JonesTrading in Stamford, Connecticut.
Unofficially, the Dow Jones Industrial Average .DJI rose
60 points, or 0.19%, to 31,068.69, the S&P 500 .SPX gained
1.58 points, or 0.04%, to 3,801.19 and the Nasdaq Composite
.IXIC added 36.00 points, or 0.28%, to 13,072.43.
Throughout the day the communications services sector
.SPLRCL was the biggest percentage decliner among the S&P
500's 11 major industry indexes.
O'Rourke said investors worried that big social media
companies such as Twitter Inc TWTR.O and Facebook Inc FB.O
could come under increased regulatory scrutiny in Congress as
the Capitol attacks highlighted their influence after they had
to ban Trump from their platforms.
But James at Wedbush argued that sectors that investors were
rotating out of technology stocks to fund other purchases.
"The stars of 2020, the tech stocks have been languishing,
as people have been using the tech stocks mostly as a source of
funds and rotating into cyclicals, healthcare and financials,"
James said.
Of the major sectors, energy stocks .SPNY were leading
gains throughout the session as crude prices rose. O/R
The consumer discretionary sector .SPLRCD saw some of its
biggest single stock boosts coming from carmakers.
Shares in U.S. automaker General Motors Co GM.N hit their
highest in a decade after Chief Executive Officer Mary Barra
outlined plans for its first electric commercial vans to be
delivered to FedEx Corp FD.N by year-end. Also shares of Tesla Inc TSLA.O jumped as investors bet on
a big expansion for the electric-car maker after a regulatory
filing showed it registered a company in India. The S&P financial sector .SPSY traded above its February
peak for the first time on Tuesday, boosted by rate-sensitive
banks .SPXBK as benchmark U.S. Treasury yields reached their
highest levels since March. US/
Investors were also waiting for the fourth-quarter earnings
season to start Friday, with results from JPMorgan JPM.N ,
Citigroup C.N and other big banks.