S&P 500, Dow hit new highs ahead of index reshuffle

The S&P 500 and Dow reached record highs on Friday ahead of Monday’s major sector reshuffle, capping a week that largely shrugged off trade worries.

Trading volume was expected to spike in anticipation of the S&P 500 sector change, when telecom will be folded into a new sector called communications services, along with heavy-hitting stocks such as Amazon.com, Facebook Inc and Walt Disney.

The S&P 500 and the Dow were up, with the tech-heavy Nasdaq losing ground. All three were on track to post their second consecutive weekly gains, with the blue-chip Dow on its way to its best weekly%age gain in over two months.

“Quadruple witching,” when stock options and futures expire, and the S&P 500 and the Russell 2000 rebalance of their indexes, were also seen contributing to heavier trading traffic.

“There’s a long going on,” said Tim Ghriskey, chief investment strategist at Inverness Counsel in New York. “Index funds have gotten an early jump on some of these changes…so they might not get caught up in all the volatility that might normally occur.”

“There could be a late spike in volume because of all these index changes occurring,” Ghriskey added.

Boeing, United States’ biggest exporter to China, led trade-sensitive industrials higher. The sector headed up gains by the S&P 500 and the Dow.

Yields on long-dated US Treasuries edged down on Brexit anxieties even as the US Federal Reserve is expected to hike key interest rates next week. Financial stocks headed lower, ending their recent rally.

The Dow Jones Industrial Average rose 78.46 points, or 0.29%, to 26 35.44, the S&P 500 gained 3.04 points, or 0.10%, to 2 933.79 and the Nasdaq Composite dropped 18.66 points, or 0.23%, to 8 009.58.

Telecoms rose 1.4% on its last trading day as a discrete major S&P sector, and was the index’s biggest%age gainer.

The advance was led by AT&T Inc, which rose 1.7% following a UBS upgrade to “buy.”

All of the FAANG group of momentum stocks were trading lower. The group includes Facebook, Apple, Amazon, Netflix and Google-parent Alphabet.

Shares of security and alarm company ADT Inc jumped for a second straight session and was last up 6.2% as Amazon introduced its new Alexa Guard service which could notify ADT of disturbances in the home.

McDonald’s Corp was up 2% after announcing it would hike its quarterly dividend by 15%.

Under Armour Inc rose 3% following JPMorgan Chase’s upgrade.

A 3.6% drop in shares of Micron led chipmakers lower after the company said US tariffs on Chinese goods would weigh on its financial results for as much as a year.

Shares of Pier 1 Imports Inc plummeted 20.4% after the home furnishings retailer cut its second-quarter forecasts.

Advancing issues outnumbered declining ones on the NYSE by a 1.29-to-1 ratio; on Nasdaq, a 1.20-to-1 ratio favored decliners.

The S&P 500 posted 53 new 52-week highs and no new lows; the Nasdaq Composite recorded 49 new highs and 31 new lows.