Technology-related stocks sold on Monday in a severe recession that pushed the Nasdaq into corrective territory and offset stocks that rose in hopes the $ 1.9 trillion COVID relief bill -19 will stimulate the economy of the United States.
The big tech stocks that drove Wall Street to successive highs during last year’s rally fell, with the Nasdaq closing down 2.41%, or about 10.5% below its record highs in last year’s rally. February 12, 14095.47.
Financial stocks and restaurant and travel-related stocks which are expected to do well as the economy reopens have risen, but have not been able to offset the weight of larger tech stocks that dominate the stock market American.
After the legislation got US Senate approval on Saturday, President Joe Biden said he hoped for a swift passage of the revised coronavirus relief plan by the Democratic-controlled House of Representatives so he could do it. sign and send $ 1,400 in direct payments to Americans.
Prospects for increased government spending and faster economic growth fueled fears of a spike in inflation, which propelled the benchmark 10-year Treasury yield to nearly one year.
US Treasury Secretary Janet Yellen, however, said on Monday that the package would lead to a “very strong” US recovery and she did not expect the economy to spin too fast due to increased spending.
In the S&P 500, the financial sector was the biggest stimulus, hitting a record high as higher market interest rates and a steeper yield curve helped banks. Industrials were close behind, also hitting an all-time high, as the materials sector approached an all-time high. The tech sector was most deeply in the red.
As bond yields have risen, concerns about equity valuation of growth-oriented stocks and technology stocks have weighed relentlessly on the Nasdaq for the past three weeks, said Michael James, managing director of equity trading at. Wedbush Securities in Los Angeles.
Financials, along with restaurant and travel-related stocks that will do well as the economy reopens, led the charge up, James said.
“People have reallocated assets in these areas. It comes from the growth technology to fund these purchases, ”he said.
The Dow Jones Industrial Average rose 306.14 points, or 0.97%, to 31,802.44, the S&P 500 lost 20.59 points, or 0.54%, to 3821.35 and the Nasdaq Composite fell from 310.99 points, or 2.41%, to 12,609.16.
The volume on the US stock exchanges was 14.03 billion shares.
A decline in major tech stocks that fueled the rally in stocks from the pandemic-induced lows of last March continued, with Apple Inc, Nvidia Corp, Tesla Inc and Alphabet Inc’s Google topped the lower shares on the market. Nasdaq.
Tech stocks are particularly sensitive to rising yields because their value relies heavily on future earnings, which are discounted more deeply when bond yields rise.
The divergence between tech stocks and non-tech stocks explains trading today, said Joe Saluzzi, partner and co-founder of Themis Trading in Chatham, New Jersey.
“The stimulus package will definitely help the big names in cap,” said Saluzzi, referring to non-tech stocks. “The exit and non-return home actions are doing better now,” he said.
Banks added about 2%, with the yield on the benchmark 10-year note hitting near a 13-month high, while airlines jumped about 5%.
Walt Disney Co jumped about 6% as California health officials set new rules that would allow Disneyland and other theme parks, stadiums and outdoor entertainment venues to reopen as of April 1.
GameStop Corp jumped about 42% after the company said it brought in shareholder Ryan Cohen to lead a transition to an e-commerce business. Rising issues outnumbered falling issues on the NYSE by a ratio of 1.39 to 1; on the Nasdaq, a ratio of 1.03 to 1 helped the declines.
The S&P 500 posted 124 new 52-week highs and no new lows; the Nasdaq Composite recorded 405 new highs and 28 new lows.