Stock market news live updates: Tech stocks stage rebound after Nasdaq slides into correction
Stocks jumped on Tuesday and technology stocks resurged after another session of deep losses. The Dow extended Monday’s gains, but trailed the S&P 500 and Nasdaq.
The Nasdaq gained more than 3% to pace toward its best day since early November. The move marked a stark reversal reversing after the index sank into a correction by the close of Monday’s session, plunging a total of more than 10% from a recent record closing high. Shares of Tesla (TSLA) jumped 10% after falling another nearly 6% on Monday and bringing its March-to-date loss to almost 17%. Apple (AAPL) shares also rebounded since hitting the lowest level since November earlier this week. The Dow, meanwhile, added to gains after rallying to an all-time intraday high on Monday.
The sharp contrast between the performance of the Dow and Nasdaq in recent sessions has underscored investors’ increasing tilt away from technology stocks in favor of value and cyclical stocks with earnings closely tied to a strong economic recovery. The U.S. House of Representatives is set to take up the $1.9 trillion stimulus package the Senate advanced over the weekend, putting the legislation on track for potential passage this week and teeing up the economy for another massive infusion of stimulus. These prospects have also pushed bond yields higher, with the yield on the 10-year Treasury note topping 1.61% on Monday, for a jump of about 50 basis points from levels just a month ago.
These factors have all worked to make the growth and tech stocks less appealing to investors, especially following many of their breakneck run-ups last year. Shares of Zoom Video Communications (ZM) – a paragon of the “work from home” trade of 2020 – have fallen 8% for the year-to-date through Monday’s close, pulling back after a nearly 400% surge last year. Shares of other technology companies and businesses conducive to social distancing have endured similar swoons, albeit while steadying at least temporarily during Tuesday’s session.
“This is a trend that tends to happen as we get out of a recession: You tend to see stocks move towards cyclicals. So things like value companies or small caps, things like energy, tend to do really well when you’re coming out of a recession. And what happened last year is, those tech companies were really doing so well that their prices were getting extremely high,” Courtney Dominguez, Payne Capital Management senior wealth advisor, told Yahoo Finance on Monday.
“I don’t think these companies are going away. I think a lot of these are going to be things that we continue to have in our workplaces going forward,” she added. “But the question is, are these companies so expensive, is all the optimism already priced in? And that’s different than these companies continuing to being a main forefront of how we work going forward.”
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10:16 a.m. ET: Rise in rates not yet reason for equity investors to fear: Canaccord Genuity
Investors have been eyeing the rapid rise in Treasury yields with increasing skittishness, with traders trying to gauge whether potential inflationary pressures during the post-pandemic economic recovery may spur the Federal Reserve to move faster than they have telegraphed on tightening monetary policy.
But even the recent jump in rates has not yet reached a point warranting major concern from equity investors, according to Canaccord Genuity analyst Tom Dwyer.
“The sharp rise in long-term U.S. Treasury rates has caused fear of a more dramatic economic and market impact, which begs the question of when the rising rate environment that has driven the recent rotation correction becomes problematic,” Dwyer wrote in a note Tuesday. “In our view, the time to worry about a more signifiant and sustainable correction due to economic impact from higher rates is when there is a meaningful tightening in financial conditions. Our favorite gauge here is the Chicago Fed National Financial Conditions Subindices (NFCI) that measures 105 credit stress indicators, and despite the rise in rates there has been no discernible deterioration in financial conditions.”
“Inflation expectations are higher, but not enough to scare the Fed,” Dwyer added. “They have made it clear that they need to see sustained inflation rather than a bump-up on easy pandemic comps.”
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9:40 a.m. ET: Investors are buying the tech rout: Bank of America
Investors are still buying technology stocks despite the deep selloff in many of these names over the past couple weeks.
New client data from Bank of America showed that inflows into U.S. stocks last week totaled $3.7 billion, with that sum landing in the 98th percentile of the firm’s weekly flows in data going back to 2008. Much of the buying was in turn taking place in tech names.
“Last week’s big net buying was concentrated in tech, which saw another near-record weekly inflow ($2.6B, the highest in over seven years),” the Bank of America analysts noted. “As a result, four-week average tech flows have hit a record high.”
Still, flows into value exchange-traded funds (ETFs) were at a five-week high last week while growth ETFs saw the largest outflow in a month, underscoring the rotation taking place across equities over the past week. By S&P 500 sector, the communication services, consumer staples and health-care sectors saw the biggest outflows last week, Bank of America added.
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9:31 a.m. ET: Stocks open higher, tech shares outperform after Monday selloff
The three major indexes opened sharply higher Tuesday morning after dipping on Monday, as heavily weighted technology shares recovered some losses. The small-cap Russell 2000 index also gained strongly, adding more than 1%. Small-cap stocks have outperformed so far fo the year-to-date amid expectations for a robust economic recovery.
The Nasdaq gained 2.5%, adding more than 300 points, shortly after market open. The Dow gained nearly 200 points, or 0.6%, and the S&P 500 jumped 1.2%.
The rise in equities coincided with a pullback in Treasury yields across the curve. The 10-year yield retreated by more than 5 basis points to just over 1.5% after hitting a one-year high of 1.61% a day earlier.
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7:23 a.m. ET Tuesday: Stock futures jump
Here were the main moves in markets as of Tuesday morning:
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S&P 500 futures (ES=F): 3,859.00, up 39.75 points or 1.04%
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Dow futures (YM=F): 31,944.00, up 168 points or 0.53%
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Nasdaq futures (NQ=F): 12,574.25, up 277 points or 2.25%
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Crude (CL=F): +$0.42 (+0.65%) to $65.47 a barrel
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Gold (GC=F): +$27.40 (+1.63%) to $1,705.40 per ounce
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10-year Treasury (^TNX): -6.1 bps to yield 1.535%
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6:04 p.m. ET Monday: Stock futures open slightly higher
Here were the main moves in markets as of 6:04 p.m. ET:
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S&P 500 futures (ES=F): 3,834.75, up 15.5 points or 0.41%
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Dow futures (YM=F): 31,904.00, up 128 points or 0.4%
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Nasdaq futures (NQ=F): 12,355.25, up 58 points or 0.47%
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Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter: @emily_mcck
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