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By David French
(Reuters) -The Dow Jones Industrial Average closed fractionally higher on Thursday, stretching its winning streak to five sessions despite light trading volumes and rising U.S. Treasury yields weighing on some of the dominant technology megacaps.
While the Nasdaq Composite and the S&P 500 were broadly unchanged, the indexes both finished slightly in negative territory. This snapped the Nasdaq's four-session run of higher closes, and ended the S&P 500's own run at three sessions.
On a day of few catalysts, investors responded to yields on U.S. government bonds inching higher, including the yield on the benchmark 10-year Treasury note hitting its highest since early May at 4.64% earlier in the session.
A strong auction of seven-year notes early in the afternoon though helped yields come off slightly, with the 10-year note at 4.58% in late-afternoon trade.
Higher yields are traditionally seen as negative for growth stocks, as it raises the cost of their borrowing to fund expansion. With markets increasingly dominated by the megacap technology stocks known as the Magnificent Seven, crimping their performance - especially in lieu of other market catalysts - will put downward pressure on benchmark indexes.
The S&P 500 slipped 2.45 points, or 0.04%, to 6,037.59 points, while the Nasdaq Composite lost 10.77 points, or 0.05%, to 20,020.36. The Dow Jones Industrial Average rose 28.77 points, or 0.07%, to 43,325.80.
Six of the megacaps fell, with Tesla leading decliners with a 1.8% fall. The outlier was Apple, rising 0.3% and continuing to edge closer to becoming the first company in the world to hit a market value of $4 trillion.
The megacap tech stocks came off somewhat in the summer, as investors sought to rotate some capital into other sectors offering more value. Since the U.S. elections in November though, they have resumed their drive upwards and have outperformed the equal-weighted version of the S&P 500, said Adam Turnquist, chief technical strategist for LPL Financial.
"As a technician, what you want to see is breakouts in absolute terms and relative terms and the Mag 7 is checking the boxes there, so very constructive leadership going into the year-end," he said.
The three main indexes have hit multiple record highs this year on hopes of a lower interest rate environment and the prospects of artificial intelligence boosting corporate profits.
However, U.S. stocks have hit a speed bump in the final month of the year following an election-led rally in November as investors assess the Federal Reserve's projection of fewer interest rate cuts in 2025.