Nasdaq Composite Rises 4%
March 09 2021 - 1:55PM
Dow Jones News
By Caitlin Ostroff and Michael Wursthorn
Technology stocks rallied Tuesday, putting the Nasdaq Composite
on course to notch its biggest gain of the year a day after sliding
into correction territory.
Investors appeared to be bargain-hunting, pouncing on stocks
that had been beaten down over the past several weeks. Shares of
Tesla, Roku and Square were all up double-digit percentages in
recent trading, while tech's heavyweights, Apple, Amazon.com and
Facebook, all rose more than 4%.
At the same time, a selloff in government bonds appeared to be
on pause. The yield on the 10-year Treasurys ticked lower to 1.538%
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 tech 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."
The Nasdaq rose 4.1%, while the S&P 500 added 2.1%. The Dow
Jones Industrial Average added more than 250 points and is flirting
with record levels.
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. But
opportunistic buying has been a reliable constant during previous
episodes of stock-market pullbacks -- look no further than the
dizzying climb stocks mounted after last March's slide into a bear
market territory.
On Tuesday, that buying translated into massive gains that
helped cut the recent losses suffered by some stocks in as much as
half. Helping the market's overall mood was signs that lawmakers
remain on track to pass the latest version of the $1.9 trillion
coronavirus stimulus package later this week.
But some investors say the big gains likely won't translate into
an end of the volatility. Too many variables remain in play, from
whether the additional stimulus Congress plans to inject into the
economy will lead to inflation to concerns that high-growth stocks
like Tesla remain too expensive.
"There will be heightened volatility as long as the path of
inflation remains as uncertain as it is," said Jase Auby, chief
investment officer for the Teacher Retirement System of Texas. Mr.
Auby said the pension fund's stock allocation is currently tilted
toward value stocks, or shares of companies more likely to benefit
in a reflationary environment.
For now, investors appeared to be putting those concerns on
hold.
Tesla shares led the S&P 500, rising 19%, cutting their loss
over the past month to about 21%. Roku shares added about 10%,
while Square gained 11%.
Big tech stocks also rallied. Apple shares rose 4.4%, Amazon
added 4.3% and Facebook gained about 5% in recent trading.
Several of those stock are featured in ARK Investment
Management's five popular exchange-traded funds, all of which were
trading up more than 7%. The gains helped stem a wave of losses
that had knocked the five actively managed funds down more than 20%
from their recent highs.
More broadly, 10 of the 11 sectors of the S&P 500 were in
the green, suggesting investors were enthusiastic, at least for
now, to resume their broad buying of stocks. Energy stocks, which
have outperformed all other sectors throughout the rotation over
the past month, fell 1%.
Meme stocks rallied, too. Shares in GameStop gained 21% 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. AMC Entertainment added more than 10%.
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 0.8%.
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%.
Write to Caitlin Ostroff at caitlin.ostroff@wsj.com and Michael
Wursthorn at Michael.Wursthorn@wsj.com
(END) Dow Jones Newswires
March 09, 2021 14:40 ET (19:40 GMT)
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