Dow hits new closing high ahead of index reshuffle

NEW YORK (Reuters) - Industrials led the Dow to a new closing high on Friday ahead of Monday’s major sector reshuffle, capping a week that largely shrugged off trade worries.

Trading volume spiked to the highest level since Feb. 9 in anticipation of the S&P 500 sector change, when telecoms will be folded into a new sector called communications services, along with heavy-hitting stocks such as Facebook Inc FB.O and Walt Disney Co DIS.N.

While the Dow closed higher, the S&P 500 and the Nasdaq ended the session in negative territory. The S&P and the Dow posted weekly gains, with the Dow showing its biggest weekly percentage advance in over two months. The Nasdaq lost ground on the week.

"Quadruple witching," when stock options and futures expire, and the rebalancing of the S&P 500 and the Russell 2000 .RUT indexes also contributed to heavier traffic.

“A lot of those changes have been anticipated by the index funds, and they’ve prepared for it,” said Tim Ghriskey, chief investment strategist at Inverness Counsel in New York. “But there’s a lot going on.”

Boeing Co BA.N, the United States' biggest exporter to China, boosted trade-sensitive industrials .SPLRCI higher. The sector led the Dow's advance.

Yields on long-dated U.S. Treasuries edged down on Brexit anxieties even with Federal Reserve expected to hike key interest rates next week. Financial stocks .SPSY headed lower, ending their recent rally.

Traders work on the floor of the New York Stock Exchange (NYSE) in New York, U.S., September 21, 2018. REUTERS/Brendan McDermid

“Any time there is a rate hike you potentially see a flattening of the yield curve, which is not good for financials,” said Ghriskey.

The Dow Jones Industrial Average .DJI rose 86.52 points, or 0.32 percent, to 26,743.5, the S&P 500 .SPX lost 1.08 points, or 0.04 percent, to 2,929.67 and the Nasdaq Composite .IXIC dropped 41.28 points, or 0.51 percent, to 7,986.96.

Telecoms .SPLRCL rose 1 percent on its last trading day as a discrete major S&P sector, and was the index's biggest percentage gainer.

All of the FAANG momentum stocks ended the session lower, with Facebook, Apple Inc AAPL.O, Inc AMZN.O, Netflix Inc NFLX.O and Google parent Alphabet Inc GOOGL.O down between 1.1 percent and 1.9 percent.

Shares of security and alarm company ADT Inc ADT.N jumped for a second day in a row, closing up 5 percent as Amazon introduced its new Alexa Guard service which could notify ADT of disturbances in the home.

McDonald's Corp MCD.N rose 2.8 percent after announcing it would hike its quarterly dividend by 15 percent.

Under Armour Inc UAA.N gained 2.9 percent following an upgrade by JPMorgan Chase.

A 2.9 percent drop in shares of Micron MU.O helped pull chipmakers lower after the company said U.S. tariffs on Chinese goods would weigh on its financial results for as much as a year.

Shares of Pier 1 Imports Inc PIR.N plunged 19.9 percent after the home furnishings retailer cut its second-quarter forecasts.

Advancing issues outnumbered declining ones on the NYSE by a 1.04-to-1 ratio; on Nasdaq, a 1.21-to-1 ratio favored decliners.

The S&P 500 posted 56 new 52-week highs and 1 new lows; the Nasdaq Composite recorded 64 new highs and 46 new lows.

Volume on U.S. exchanges was 10.77 billion shares, nearly 64 percent higher than the 6.57 billion average over the last 20 trading days.

Reporting by Stephen Culp; Editing by Meredith Mazzilli