Stocks Rise as Tech Shares Rebound
Nasdaq rallied a day after major U.S. tech-heavy indexes fell into correction territory
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Updated March 9, 2021 11:03 am ET
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Technology stocks rallied Tuesday, helping the Nasdaq Composite rebound a day after sliding into correction territory.
Investors appeared to pounce on some of the most beaten-down stocks, pushing up shares of Tesla, PayPal Holdings, PYPL +6.77% Nvidia and others that have suffered steep declines in recent sessions. The buy-the-dip mentality had been largely absent during a broader rotation out of growth stocks and into shares of companies better positioned to benefit from an economic upswing.
The Nasdaq rose 3.2%, while the S&P 500 added 1.8%. The Dow Jones Industrial Average added more than 250 points and is flirting with record levels.
At the same time, a selloff in government bonds appeared to be on pause. The yield on the 10-year Treasurys ticked lower to 1.552% on Tuesday. It had ended the previous day at 1.594%, the highest level in more than a year.
The stabilization in bond markets is likely to help technology shares recoup some of their losses, investors said. Money managers expect many companies in the sector to continue to benefit from increased online shopping and at-home access to media, entertainment and computing options even as Covid-19 lockdowns ease.
“It is this buy-the-dip mentality,” said Daniel Morris, chief market strategist at BNP Paribas Asset Management. “It’s not like we’ve changed our long-term view on tech. Everyone expects it to do well—it was just really expensive.”
U.S. lawmakers are on track to pass the latest version of the $1.9 trillion coronavirus stimulus package later this week. That has boosted investors’ confidence in the economy’s prospects and bolstered demand for shares of companies that are likely to benefit from the economic rebound, such as banks and energy producers.
This rotation sent the Dow—which is weighted more heavily toward cyclical sectors—to notch its second highest close in history Monday.
Tesla shares led the S&P 500, rising 11%, cutting their loss over the past month to about 26%. PayPal and Nvidia jumped 6% each.
More broadly, all 11 sectors of the S&P were in the green in recent trading, suggesting investors were enthusiastic, at least for now, to resume their broad buying of stocks.
Meme stocks rallied, too. Shares in GameStop gained 18% as shares climbed for a second day after the board tapped Chewy co-founder Ryan Cohen to lead a committee dedicated to transforming the retailer.
Some investors now expect that bond markets could calm as appetite for U.S. government debt revives following the sharp rise in yields. The 10-year Treasury yield was as low as 0.915% near the start of the year.
“We think a big part of the bond-yield move has played out,” said Hani Redha, a portfolio manager at PineBridge Investments. “At this level of yields, we do expect additional buyers to come in. That tends to stabilize the yield level.”
Overseas, the pan-continental Stoxx Europe 600 ticked up 0.7%. In Asia, major indexes were mixed. The Shanghai Composite dropped 1.8%, and South Korea’s Kospi declined 0.7%. Japan’s Nikkei 225 advanced 1%.
The New York Stock Exchange on Monday.
Photo: Lev Radin/Zuma Press