US: Dow ends at record as interest rate angst weighs on Nasdaq

[NEW YORK] Banking and industrial shares led the market on Tuesday, lifting the Dow to a fresh record, while the tech-rich Nasdaq retreated amid worries over higher interest rates.

After broad-based gains on Monday, major indices diverged Tuesday as US Treasury yields continued to climb amid expectations the Federal Reserve will hike interest rates early in 2022.

Tech firms - which generally rely on debt to fuel growth - tend to be punished more when interest rates rise.

"Wall Street knows the first quarter of the year will be all about ramping up Fed rate hike expectations as investors assess the impact of elevated energy prices, surging Treasury yields, and the never-ending focus of new Covid variants," Oanda's Edward Moya said in a commentary.

The blue-chip index finished up 0.6 per cent at 36,799.65.

The broad-based S&P 500 edged away from a record close, shedding 0.1 per cent to end at 4,793.54, while the tech-rich Nasdaq Composite Index tumbled 1.3 per cent to 15,622.72.

The Institute for Supply Management's national manufacturing index fell more than expected in December, but still held well above the 50-per cent threshold indicating expansion for the 19th straight month.

Industrial heavyweight Caterpillar piled on more than five per cent to lead the Dow, followed by financial giants like JPMorgan Chase and Goldman Sachs, which would benefit from rising interest rates.

Among individual companies, Ford surged 11.7 per cent after announcing plans to double production of its new F-150 Lightning electric pickup truck to 150,000 vehicles per year.

But large tech names had a difficult day, with Facebook, Amazon and Netflix all falling, along with Apple, which finished 1.3 per cent lower, a day after becoming the first US company to reach a US$3 trillion valuation on Monday.

AFP