* Durable goods order for May falls unexpectedly
* Fed’s Williams, Dudley bat for higher interest rates
* Micron higher after brokerage ups price target
* Indexes up: Dow 0.22 pct, S&P 0.21 pct, Nasdaq flat
(Updates to early afternoon)
By Tanya Agrawal
June 26 (Reuters) – The Dow Jones Industrial Average and the
S&P 500 were higher in late afternoon trading on Monday but a
fall in technology stocks capped gains on the Nasdaq.
Technology stocks have been under pressure as investors,
worried about stretched valuations, switch to defensive sectors.
A fall in Microsoft, Amazon and Alphabet
weighed on the Nasdaq.
The S&P utilities and telecommunications
rose about 0.8 percent and led the gainers among the 11 S&P
The S&P energy was marginally higher as oil prices
rebounded after last week’s seven-month lows.
But gains were hemmed in by a relentless rise in U.S. supply
and a surge in demand for short sale contracts that signal
investors see potential for a price fall.
The recent drop in oil prices has spurred concerns about low
inflation, which stubbornly remains below the Federal Reserve’s
2 percent target rate.
The central bank raised rates this month for the second time
this year and is expected to raise it again. Futures imply only
a 50 percent chance of another rate hike by December.
At 13:02 p.m. ET (1702 GMT), the Dow Jones Industrial
Average was up 46.06 points, or 0.22 percent, at
21,440.82, the S&P 500 was up 5.32 points, or 0.21
percent, at 2,443.62.
The Nasdaq Composite was up 0.25 points at 6,265.50.
The financial index rose 0.57 percent after a string
of Federal Reserve policymakers appeared to back another rate
hike this year despite a patch of recent weak economic data.
San Francisco Fed President John Williams said the Fed needs
to raise rates gradually or the economy runs the risk of
New York Fed chief William Dudley said recent narrowing of
credit spreads, record stock prices and falling bond yields
could encourage the Fed to continue tightening U.S. policy.
“We’re seeing a very fast rotation that’s been typical of
the past month or so and it’s not necessarily based on what’s
happening on the yield curve,” said Art Hogan, chief market
strategist at Wunderlich Securities in New York.
“It’s based more on the economic conversations that we’ve
been seeing from a parade of Fed speakers who continue to tell
that same story that we’ll see another rate hike this year.”
The spread between the U.S. two-year and 10-year bond yield
curve flattened to its lowest since September.
Data on Monday showed new orders for key U.S.-made capital
goods unexpectedly fell in May, with non-defense orders
excluding aircraft – a closely watched proxy for business
spending plans – dropping 0.2 percent.
Economists polled by Reuters had expected a rise of 0.3
Micron was up 2.5 percent at $32.53 after Cowen & Co
increased its price target on the chipmaker’s stock.
Advancing issues outnumbered decliners on the NYSE by 2,022
to 870. On the Nasdaq, 1,658 issues rose and 1,157 fell.
(Reporting by Tanya Agrawal; Editing by Arun Koyyur)