Nasdaq leads the way as US markets close higher


  • 2021-03-10 HKT 05:31″ title=”Wall Street gained strongly, with the Nasdaq jumping almost 4 percent. File photo: Shutterstock”>


    Wall Street gained strongly, with the Nasdaq jumping almost 4 percent. File photo: Shutterstock
    Wall Street gained strongly, with the Nasdaq jumping almost 4 percent. File photo: Shutterstock

US equity markets rallied on Tuesday, with the Nasdaq gaining about 4 percent to recoup heavy losses from the previous session as US bond yields retreated and investors scooped up battered technology stocks.

The Dow Jones Industrial Average rose 0.1 percent to 31,832, the S&P 500 gained 1.4 percent to 3,875 and the Nasdaq Composite added 3.7 percent to 13,073.

The Nasdaq posted its biggest single-day rise since November 4. The Dow set a record intraday high but pulled back from earlier gains at the close.

Tesla jumped the most in almost a year, while Amazon and Microsoft posted the biggest single-day gains in five weeks.

News that a US$1.9 trillion coronavirus relief package was nearing final approval sparked a spike in yields on Monday, pushing the Nasdaq to end more than 10 percent below its February 12 closing high, confirming a correction for the index.

US 10-year Treasury note yields eased to as low as 1.523 percent after hovering near 13-month highs of 1.613 percent on Monday. Longer-dated yields have jumped over the last month as investors price in a faster rebound and higher inflation that expected at the start of the year.

The market is adjusting to the new level in interest rates, said Kristina Hooper, chief global market strategist at Invesco in New York.

Companies whose products and services are in demand when the economy is doing well, known as cyclicals, and small-cap stocks will outperform this year, she said. Tech will end the year higher but not be the leader as it was in the past year’s rally.

“Today the 10-year is down a bit, and that takes pressure off valuations, so tech is performing well,” Hooper said. “The market is just about getting comfortable at this level of rates.”

Rising rates disproportionately hurt high-growth tech companies because they are valued on earnings expected years into the future rather than profits earned in the short term.

“Potential headwind for the market is (when) interest rates rise further from this point over the short period … since they have risen too fast in too little time,” said Michael Sheldon, chief investment officer at RDM Financial in Westport, Connecticut.

The global economic outlook has brightened as vaccine rollouts gain speed and the United States launches a massive new stimulus package, the Organization for Economic Co-operation and Development said, hiking its 2021 growth forecasts.

The Democrat-controlled US House of Representatives will take up the relief bill on Wednesday, with the chamber’s expected approval leading to President Joe Biden’s signing the legislation into law later this week. (Reuters)