TECHNOLOGY-related shares sold off on Monday in a big downturn that pushed the Nasdaq into a correction and offset stocks that rose on hopes the US$1.9 tril COVID-19 relief bill will spur the US economic recovery.
The Dow Jones Industrial Average rose 306.14 points or 0.97% to 31,802.44, the S&P 500 lost 20.59 points, or 0.54% to 3,821.35 while the Nasdaq Composite dropped 310.99 points or 2.41% to 12,609.16.
Volume on US exchanges was 14.03 billion shares.
The Nasdaq is now down 10.6% from its Feb. 12 record close, or more than a 10% slide the market considers a correction.
After the stimulus bill won US Senate approval on Saturday, President Joe Biden said he hoped for quick passage by the Democrat-controlled House of Representatives so he could sign it and send US$1,400 direct payments to Americans.
But prospects of more government spending and a growing economy have stoked fears of an inflation spike, sending the benchmark 10-year Treasury yield to near one-year highs and weighing on technology shares that rely on cheap funding for growth.
US Treasury Secretary Janet Yellen said on Monday the package would fuel a “very strong” US recovery and she did not expect the economy to run too hot because of the increased spending.
As bonds yields have moved up, concerns about equity valuations for growth-oriented stocks and tech stocks specifically have weighed on the Nasdaq relentlessly the last three weeks, said Michael James, managing director of equity trading at Wedbush Securities in Los Angeles.
Stocks that will do well once people start traveling and eating out again have been leading the charge higher, James said.
“People have been reallocating assets into those sectors. It’s been coming out of growth-tech to fund those purchases,” he said.
The financial sector was the biggest boost in the S&P 500, hitting a record as higher market rates and a steeper yield curve helped banks. Industrials were right behind, also reaching a record high, while the materials sector neared an all-time peak. The technology sector was deepest in the red.
The recent slide in the big tech stocks continued, with Apple Inc, Nvidia Corp, Tesla Inc and Alphabet Inc’s Google leading declining shares on Nasdaq.
GameStop Corp surged about 42% after the company said it had tapped shareholder Ryan Cohen to lead a transition to an e-commerce business.
Advancing issues outnumbered declining ones on the NYSE by a 1.39-to-1 ratio; on Nasdaq, a 1.03-to-1 ratio favoured decliners.
The S&P 500 posted 124 new 52-week highs and no new lows; the Nasdaq Composite recorded 405 new highs and 28 new lows. – March 9, 2021
