Wall Street closed mixed on Monday buoyed by two forces of different directions. The Dow ended sharply higher as market participants expect the new $1.9 trillion fiscal stimulus to be introduced by next week. However, higher yield on long-term U.S. sovereign bonds forced the Nasdaq Composite to finish in correction territory. The S&P 500 also ended in red.
How Did The Benchmarks Perform?
The Dow Jones Industrial Average (DJI) rallied 1% or 306.14 points to close at 31,802.44. The blue-chip index surged more than 650 points at intraday high and touched a fresh all-time high at 32,148.04. The index touched above 32,000 level for the first time since Feb 24. Notably, 25 components of the 30-stock index ended in the green while 5 in red and.
The Nasdaq Composite finished at 12,609.16, tumbling 2.4% or 310.99 points due to sharp decline in large-cap tech stocks. The teach-heavy index entered in correction territory after finishing more than 10% below its recent closing high of 14,095.47 recorded on Feb 12.
Tech behemoths like Apple Inc.
AAPL
, Alphabet Inc.
GOOGL
and Netflix Inc.
NFLX
plummeted 4.2%, 4.3% and 4.5%, respectively. Apple carries a Zacks Rank #2 (Buy). You can see
the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here
.
Meanwhile, the S&P 500 fell 0.5% to end at 3,821.35. In the intraday trading, the broad-market index rose 1%. The Utilities Select Sector SPDR (XLU), the Materials Select Sector SPDR (XLB) and the Financials Select sector SPDR (XLF) gained 1.4%, 1.3% and 1.3%, respectively, while the Technology Select Sector SPDR (XLK) tanked 2.4%. Notably, eight out of eleven sectors of the benchmark index closed in the green while three in red.
The fear-gauge CBOE Volatility Index (VIX) was up 3.3% to 25.47. A total of 14.03 billion shares were traded on Monday, lower than the last 20-session average of 15 billion. Advancers outnumbered decliners on the NYSE by a 1.39-to-1 ratio. On Nasdaq, a 1.03-to-1 ratio favored declining issues.
Expectations of a Fresh Large Fiscal Stimulus
On Mar 4, the Senate passed a revised $1.9 trillion coronavirus relief package proposed by President Joe Biden in mid-January. The House of Representatives, where the Democrats hold the majority, is likely to pass the bill on Mar 9 and send it to Biden for his signature before a Mar 14 deadline to renew unemployment aid programs.
On Jan 14, President elect Joe Biden proposed a new $1.9 trillion coronavirus-aid package called “American Rescue Plan”. The revised plan will include a direct payments of $1,400 and supplemental unemployment benefits to $300 per week through Sep 6. Minimum wage rate to be hiked to $15 per hour and moratoriums on eviction and foreclosure on mortgages to be extended to Sep 30.
Biden’s proposal includes $15 billion in grants to small businesses, along with $35 billion in low-interest loans. The Small Business Paycheck Protection Program of $284 billion in loans will also continue. The plan will include $20 billion for a national vaccination program, $50 billion for COVID testing, and $350 billion aid to state and local governments.
In addition, the plan will provide $130 billion for reopening of schools, $35 billion for higher education and $5 billion for a “Hardest Hit Education Fund.”
Hike in Government Bond Yields
On Mar 8, the yield on 10-year U.S. Treasury Note rose 4.3 basis points to 1.594%, marking its highest since Feb 13, 2020. The yield on 30-year U.S. Treasury Note rose 2 basis points to 2.306%, its second-highest level of 2021.
Gradual reopening of the economy and massive fiscal stimulus compelled investors to reallocate funds from safe-haven government bonds to risky asset like equities resulting in a spike in government bond yields.
These Stocks Are Poised to Soar Past the Pandemic
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