US stocks rose Tuesday after bond yields fell, prompting investors to buy the decline in battered tech stocks.
The Dow Jones Industrial Average rose 150 points, or 0.6%. The S&P 500 gained 1.2%. The tech-heavy Nasdaq Composite gained 2.5%. Tesla shares rose 6.8%, while Apple, Amazon, Microsoft, Netflix, and Alphabet all gained at least 2%.
Technology stocks bounced back from heavy losses as bond yields stabilized. The 10-year government bond yield fell more than 6 basis points to 1.52%. It was trading at 1.62% on Monday.
“Many of these technology stocks are oversold in the short term, so it’s no great surprise that they are seeing a good rebound,” said Matt Maley, chief marketing strategist at Miller Tabak. “The question will be whether this jump is a strong one … or a ‘dead cat blow’ that doesn’t last long at all.”
The Dow rose more than 300 points on Monday as investors were optimistic about the economic comeback of the pandemic. Tech stocks didn’t participate on Monday, however. The Nasdaq Composite lost 2% as a rapid rise in interest rates led investors to exit expensive tech stocks.
The tech benchmark closed more than 10% below its February 12 closing high and fell into correction territory. Lately, high-growth names have come under pressure as rising interest rates make their future earnings less valuable today and compress the high valuations of stocks.
“Right now the market is expanding and we believe the bull market is getting stronger in a sense and that will be to our advantage in the long run,” said Cathie Wood of Ark Investment Management on Monday at CNBC’s Closing Bell.
“We have great opportunities” in the sell-off to buy the game-only names in the fund, added Wood, who is focused on disruptive technology stocks. Wood’s flagship fund Ark Innovation (ARKK) gained 4%.
Hedge fund manager David Tepper said Monday the recent sharp rise in interest rates is likely over and it is difficult to be bearish on stocks right now. Tepper noticed that names like Amazon were starting to look attractive.
Over the weekend, the Senate passed a $ 1.9 trillion economic relief and incentive bill that is slated to include another round of economic reviews. President Joe Biden is expected to sign the bill by March 14th.
The economic news caused investors to focus on reopening games and cyclical stocks to look to a strong economic recovery. Banks, airlines, cruise lines and retailers led the gains on Monday.