* Intel gains on $20 bln chip expansion announcement
* GameStop slumps on plans to sell shares
* Energy stocks jump 3% as oil prices rebound (Adds midafternoon prices, analyst comment)
NEW YORK, March 24 (Reuters) - The S&P 500 and the Dow edged higher on Wednesday on rising financial and industrial stocks as Federal Reserve Chair Jerome Powell and Treasury Secretary Janet Yellen expressed optimism about the recovery outlook from the coronavirus pandemic.
The remarks by the top two U.S. economic officials mirrored what they told Congress the day before, with Powell saying on Wednesday the most likely case is 2021 will be “a very, very strong year.”
Wall Street’s main indexes have flipped up and down this week as falling bond yields prompted beaten-down technology stocks to rise while energy and financial shares that have rallied this year on growing economic prospects sold off.
The ongoing rotation could be seen in an 0.8% gain in underpriced value stocks and a 0.5% drop in growth stocks.
The 10-year yield fell to 1.617%, from 1.638% on Tuesday.
Investors have focused on the yield on the benchmark 10-year Treasury note, pondering whether there is room for long-term interest rates to run, said David Kelly, chief global strategist at JPMorgan Asset Management. “We’re in a little bit of a lull here. We know that the economy is primed to begin to really accelerate in the second quarter,” Kelly said. “But we haven’t seen that acceleration yet so that’s what we’re waiting for.”
Adding to upward momentum was data showing U.S. factory activity picked up in early March amid strong growth in new orders. But supply chain disruptions continued to exert cost pressures on manufacturers, keeping inflation fears in focus.
“Everybody’s bullish about the prospects of a recovery right now,” said David Yepez, lead equity analyst and portfolio manager at Exencial Wealth Advisors. “In order for the market to bottom we need to have more fear, and I don’t feel like the market has fear right now.”
Financials and industrials rose more than 1% each, while energy jumped more than 3% as crude prices rebounded from a 6% fall in the last session.
By 2:33 p.m. EDT, the Dow Jones Industrial Average was up 179.06 points, or 0.55%, at 32,602.21, the S&P 500 gained 5.8 points, or 0.15%, to 3,916.32 and the Nasdaq Composite dropped 138.28 points, or 1.05%, to 13,089.42.
Apple Inc, Tesla Inc and Facebook Inc led decliners on the S&P 500.
Intel Corp retreated 1.2% after earlier gains as the company, in its efforts to expand chipmaking capacity, announced plans to spend as much as $20 billion to build two factories in Arizona and open its factories to outside customers.
U.S.-listed shares of Taiwan Semiconductor dropped 3.9%, while semiconductor equipment makers Lam Research Corp , Applied Materials Inc and ASML Holding rose between 4% and 6.5%. Applied Materials was the biggest boost on the S&P 500.
Bitcoin gained 2.5% after Tesla’s founder, Elon Musk, said the company’s electric vehicles can now be bought using bitcoin and the option will be available outside the United States later this year.
GameStop Corp tumbled 22% after the videogame retailer said it might cash in on a meteoric rise in its share price to fund its e-commerce expansion.
Advancing issues outnumbered declining ones on the NYSE by a 1.35-to-1 ratio; on Nasdaq, a 1.85-to-1 ratio favored decliners.
The S&P 500 posted 15 new 52-week highs and no new lows; the Nasdaq Composite recorded 39 new highs and 111 new lows. (Reporting by Herbert Lash in New York Additional reporting by Devik Jain and Medha Singh in Bengaluru Editing by Maju Samuel and Matthew Lewis)