The U.S. Capitol in the evening hours on Mar. 5, 2021 in Washington, DC.
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Stocks ended mixed Monday after the Senate’s passage of a $1.9 trillion Covid stimulus package and as investors continued to wrestle with the implications of higher bond yields.
At the close, the Dow Jones Industrial Average was up 306 points, or 1%; the index touched a new intraday record during a choppy trading, but only managed to notch its second highest close in history. The S&P 500 reversed earlier gains to end down 0.5%, while the Nasdaq Composite was the big underperformer of the day, ending down 2.4%, which put it in correction territory.
Although it was a brutal day for big tech, that selloff masked what was otherwise a strong day for many other sectors: In the S&P 500, 341 stocks finished higher, compared to 164 that ended in the red. Treasury yields have been rising—the 10-year has added 0.038 percentage point to 1.606% Monday afternoon.
Investors in Europe and Asia switched out of long-duration trades into companies leveraged to a recovering economy.
In Asia, where traders also had their first opportunity to react to stronger-than-expected U.S. jobs data for February, the Nikkei 225 dropped 0.4%, the Hang Seng fell 1.9% and the Kospi Composite lost 1%. In Europe, the FTSE 100 rose 1.3% and the German DAX gained 3.3%.
That regional split masked big sector moves under the hood. Banks, which have benefited from a growing gap between long- and short-dated bond yields, advanced in Europe, with gainers including Banco de Sabadell and ABN Amro. In Asia, technology stocks including smartphone maker Xiaomi and internet services provider Tencent slumped.
“Slowly but steadily cheap stocks—also known as value stocks—are outperforming technology stocks and we expect this to continue. One way to see this is the sudden pickup in interest for European banks which are typically good value. This is driven in large part by a rotation out of expensive tech stocks that is under way,” said Sebastien Galy, senior macro strategist at Nordea Asset Management.
Galy said the yield on the 10-year Treasury could reach 1.80%.
The oil sector also will be in the spotlight, as Brent crude rose as high as $71.38 after Saudi Arabia and Yemen rebels traded airstrikes.
GameStop (GME) jumped 41.2% on news that its board of directors formed a new strategic committee , aimed at transforming the retailer into a more technology-focused company.
Walt Disney (DIS) has risen 6.3% on reports California may allow its theme parks to reopen soon. Disney’s new film, Raya and the Last Dragon, led the box office with $8.6 million in ticket sales, but that amount was lower than expected.
General Electric (GE) stock gained 4% on reports it is close to combining its airplane-leasing business with AerCap.
Tesla (TSLA) is down 5.9%. Wolfe Research said the stock could hit $1,000 by the end of 2024, but kept a Neutral rating on its shares.
Target (TGT) rose 2.6% after getting upgraded to Buy from Neutral at Guggenheim.
Microsoft (MSFT) lost 1.8% despite getting upgraded to Conviction Buy from Buy at Goldman Sachs.
Write to Teresa Rivas at [email protected]
