U.S. stock markets closed sharply higher on Tuesday on expectations of a large fiscal stimulus and stabilization in yields of long-term sovereign bonds. The technology sector rebounds after Monday’s pullback. All the three major stock indexes ended in the green.
How Did The Benchmarks Perform?
The Dow Jones Industrial Average (DJI) rose 0.1% to close at 31,832.74. In the intraday session, the blue-chip index touched a fresh all-time high at 32,150.32. Notably, 13 components of the 30-stock index ended in the green while 17 in red.
The Nasdaq Composite finished at 13,073.82, jumping 3.7% or 464.66 points due to strong performance by large-cap tech stocks. This marked the tech-heavy index’s best single-day performance since Nov 4, 2020. Moreover, the index closed above 13,000 for the first time since Mar 2.
Meanwhile, the S&P 500 gained 1.4% to end at 3,875.44. The Consumer Discretionary Select Sector SPDR (XLY) and the Technology Select Sector SPDR (XLK) climbed 3.8% and 3.4%, respectively, while the Energy Select Sector SPDR (XLE) fell 1.8%. Notably, seven out of eleven sectors of the benchmark index closed in the green while four in red.
The fear-gauge CBOE Volatility Index (VIX) was down 5.7% to 24.03. A total of 13.88 billion shares were traded on Tuesday, lower than the last 20-session average of 15.25 billion. Advancers outnumbered decliners on the NYSE by a 1.78-to-1 ratio. On Nasdaq, a 2.83-to-1 ratio favored advancing issues.
Technology Sector Rebounds
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. Higher risk-free return is detrimental to high-growth industries like technology as most of these companies depend on easy borrowing at cheap rates.
On Mar 8, the yield on 10-year U.S. Treasury Note rose 1.613%, 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. However, on Mar 9, the yield on 10-year U.S. Treasury Note retreated to 1.523%.
Consequently, shares of technology giants like Apple Inc.
AAPL
, Facebook Inc.
FB
and Twitter Inc.
TWTR
surged 4.1%, 4.1% and 6.4%, respectively. Apple and Facebook carry a Zacks Rank #2 (Buy). You can see
the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here
.
House to Vote on Fresh Fiscal Stimulus
On Mar 10, the House of Representatives, where the Democrats hold the majority, will vote on President Joe Biden’s proposed $1.9 trillion of fresh coronavirus-aid package. On Mar 4, the Senate passed a revised $1.9 trillion coronavirus relief package. If the House clears the bill, it will go to Biden for his signature before a Mar 14 deadline to renew unemployment aid programs.
The revised version of Biden’s “American Rescue 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.”
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Equinor ASA
EQNR
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