U.S. stocks rose Tuesday as a rise in Treasury yields relented, with the tech-heavy Nasdaq Composite up sharply a day after it tumbled into correction territory.
What are major indexes doing?
- The Dow Jones Industrial Average DJIA, 0.71% rose 178.91 points, or 0.6%, to 31,981.35.
- The S&P 500 SPX, 1.74% was up 42.56 points, or 1.1%, to 3,863.91.
- The Nasdaq Composite COMP, 3.48% surged 298.44 points, or 2.4%, to 12,907.60.
On Monday, the Dow DJIA, 0.71% ended with a gain of 306.14 points, or 1%, at 31,802.44 after rising more than 650 points earlier in the session to hit an intraday record. The S&P 500 finished with a loss of 0.5%. And the Nasdaq slumped 2.4% to end at 12,609.16, leaving it 10.5% off its record close from Feb. 12. The Nasdaq’s slide meets the definition of a correction, which is a fall of 10% from a recent peak.
What’s driving the market?
Treasury yields have been calling the tune, with their rise fueling a rotation away from growth-oriented stocks, including many of the highflying tech-related shares that boomed during the pandemic-inspired lockdowns. Investors have been using the proceeds to pile into shares of more cyclical and value-oriented stocks and sectors that are seen as poised to benefit most from a wider reopening of the economy.
“Now that investors can get a better return on safe assets like bonds, taking a massive risk in tech names with sky-high valuations is not as attractive,” said Marios Hadjikyriacos, investment analyst at XM, in a note.
“Hence, most of the tech sector got scorched yesterday while beaten-down value names came back to life,” he said.
That dynamic was on hold amid a lack of other major catalysts on Tuesday, with the yield on the 10-year Treasury note TMUBMUSD10Y, 1.540% off around 7 basis points at 1.531%.
Meanwhile, the House is expected this week to provide final approval of a $1.9 trillion package of COVID relief spending, giving President Joe Biden an early political victory and stoking expectations for a surge in economic growth later in 2021, accelerating a reopening fueled by vaccine rollouts and past doses of stimulus.
That same dynamic has fed the rise in bond yields as investors look for at least a near-term surge in inflation.
Investors will get a look at inflation data later this week, but the economic calendar remained light on Tuesday. The National Federation of Independent Business said its closely followed optimism index edged up to 95.8 last month from 95 in January.
Meanwhile, Washington will keep the spotlight on Robinhood and other zero-commission brokers when the Senate Banking Committee holds a hearing at 10 a.m. Eastern, with expert witnesses set to warn of the dangers of financial speculation.
Which companies are in focus?
- Tesla Inc. TSLA, 10.63% shares were up more than 8% Tuesday after upbeat car sales data out of China. Shares were attempting to snap a five-day losing streak that saw them drop 21.6% through Monday,
- Shares of GameStop Corp. GME, 21.15% jumped 11%, building on Monday’s 41% gain, which came after the company said it has created a new strategy committee to identify ways to accelerate its transformation.
- Other stocks, which, like GameStop, were heavily promoted on Reddit’s WallStreetBets forum were also on the riseTuesday, including movie-theater chain AMC Entertainment Holdings Inc. AMC, 5.27%, BlackBerry Ltd. BB, 5.08%, Naked Brand Group Ltd. NAKD, -0.16%, and headphone maker Koss Corp. KOSS, 1.72%.
- Shares of Dick’s Sporting Goods Inc. DKS, -5.07% slumped more than 4% after reporting fourth-quarter results Tuesday morning.
- Stitch Fix Inc. SFIX, -27.26% shares plunged 25% after the retailer reported fiscal second-quarter sales that missed Wall Street expectations.
What are other markets doing?
- The ICE U.S. Dollar Index DXY, -0.41%, a measure of the currency against a basket of six major rivals, was down 0.3% after hitting a more-than-three-month high on Monday.
- Oil futures edged higher in choppy trade, with the U.S. benchmark up 0.1% at $65.10 a barrel.
- Gold futures GC00, 2.13% were buoyed as Treasury yields and the dollar retreated, bouncing 2.3% to $1,716.60 an ounce.
- The pan-European Stoxx 600 SXXP, 0.63% rose 0.6% and London’s FTSE 100 UKX, -0.04% was up 0.3%.
- In Asia, the Shanghai Composite SHCOMP, -1.82% stumbled 1.8%, while Hong Kong’s Hang Seng Index HSI, +0.81% rose 0.8% and Japan’s Nikkei 225 NIK, +0.99% rallied 1%.