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Nasdaq hits correction, Dow advances as stimulus bill nears finish line

Stock MarketsMar 08, 2021 05:05PM ET
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2/2 © Reuters. FILE PHOTO: A view of the exterior of the Nasdaq market site in the Manhattan borough of New York City 2/2

By Herbert Lash and Karen Pierog

(Reuters) - Technology-related shares sold off on Monday in a big downturn that pushed the Nasdaq into corrective territory and offset stocks that rose on hopes the $1.9 trillion COVID-19 relief bill will spur the U.S. economy.

The big technology stocks that have led Wall Street to scale successive peaks over the past year's rally fell with the Nasdaq closing down 2.41%, roughly 10.5% below its Feb. 12 record close of 14,095.47.

Financial shares and restaurant and travel-related stocks that are expected to do well when the economy reopens rose but were unable to offset the weight of the bigger tech shares that dominate the U.S. stock market.

After the legislation won U.S. Senate approval on Saturday, President Joe Biden said he hoped for a quick passage of the revised coronavirus relief package by the Democrat-controlled House of Representatives so he could sign it and send $1,400 direct payments to Americans.

Prospects of more government spending and faster economic growth have stoked fears of a spike in inflation, sending the benchmark 10-year Treasury yield to near one-year highs.

U.S. Treasury Secretary Janet Yellen, however, said on Monday the package would fuel a "very strong" U.S. recovery and she did not expect the economy to run too hot because of the increased spending.

    In the S&P 500, the financial sector was the biggest boost, hitting a record as higher market interest 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.

As bonds yields have moved higher, 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.

Financials, along with restaurant and travel-related stocks that will do well as the economy reopens, 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 that those purchases,” he said.

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 and the Nasdaq Composite dropped 310.99 points, or 2.41%, to 12,609.16.

Volume on U.S. exchanges was 14.03 billion shares.

A slide in the big tech stocks that have driven the rally in equities since pandemic-induced lows of last March continued, with Apple Inc (NASDAQ:AAPL), Nvidia (NASDAQ:NVDA) Corp, Tesla (NASDAQ:TSLA) Inc and Alphabet (NASDAQ:GOOGL) Inc’s Google leading declining shares on Nasdaq.

Tech stocks are particularly sensitive to rising yields because their value rests heavily on earnings in the future, which are discounted more deeply when bond returns go up. The divergence between the tech stocks and non-tech stocks explains trading today, said Joe Saluzzi, partner and co-founder of Themis Trading in Chatham, New Jersey. "The stimulus package will be certainly helping the bigger cap names," Saluzzi said, referring to non-tech stocks. "The get-out and non-stay at home stocks are doing better now," he said.

Banks added about 2% as the yield on the benchmark 10-year note stood near a 13-month high, while airlines jumped about 5%.

Walt Disney (NYSE:DIS) Co jumped about 6% as California health officials set new rules that would allow Disneyland and other theme parks, stadiums and outdoor entertainment venues to reopen as early as April 1.

GameStop Corp (NYSE:GME) 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 favored 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.

Nasdaq hits correction, Dow advances as stimulus bill nears finish line
 

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Comments (35)
Bulls MakeMore
Bulls MakeMore Mar 08, 2021 3:33PM ET
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The market can be irrationsl for months on end...to make money you have to not care about losing it.
Tarang Shah
Tarang Shah Mar 08, 2021 1:15PM ET
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time to sell entire portfolio to those who still want to buy in the name of 'hopes' which is like factored in 25 times already!
Christos Rammos
Christos Rammos Mar 08, 2021 12:50PM ET
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Prepare for the big fall!
Edward Chong
Edward Chong Mar 08, 2021 12:50PM ET
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arent u tired?
Bulls MakeMore
Bulls MakeMore Mar 08, 2021 12:50PM ET
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The "big fall" has already happened
Stacy Starner
Stacy Starner Mar 08, 2021 12:48PM ET
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Crypto safe haven for now until dems figure that one out then that will be crooked
Stacy Starner
Stacy Starner Mar 08, 2021 12:47PM ET
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Crypto new safe haven least dems dont have a clue n how that works yet give them time theyll be crooked on that
Oliver Brecht
Oliver Brecht Mar 08, 2021 12:43PM ET
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simple question, who is buying?
Jacob Steinschlag
Jacob Steinschlag Mar 08, 2021 12:43PM ET
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Jacob Steinschlag
Jacob Steinschlag Mar 08, 2021 12:43PM ET
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that is growth, not the dow jones ***
Cal Lowe
Cal Lowe Mar 08, 2021 12:38PM ET
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Another time bomb confirmed. It will burst/expode soon
Joanna Yin
Joanna Yin Mar 08, 2021 12:35PM ET
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When is next cheque coming? More free money is required to maintain this bubble.
Dave Jones
Dave Jones Mar 08, 2021 12:32PM ET
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thought this was priced in 20 times already
Balazs Gal
Balazs Gal Mar 08, 2021 12:17PM ET
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Basic rules (inflation -> commodities are a hedge against, or more money printing -> currency depreciation) DOES NOT work anymore...Something has gone wrong on the markets...Could not tell what
Jacob Steinschlag
Jacob Steinschlag Mar 08, 2021 12:17PM ET
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sheer manipulation
Pablo Blanc
Pablo Blanc Mar 08, 2021 12:17PM ET
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Hedge funds got ****ed thats what happened they ran up the bonds to scare the retail
Mitchel Pioneer
Mitchel Pioneer Mar 08, 2021 12:08PM ET
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The criminal manipulation resumes in earnest, as the greatest investment fraud in history financial dismantles America in broad daylight.  Average holdings in retirement plans have been criminally inflated to catastrophic levels with this joke of a market finally implodes.
Casador Del Oso
Casador Del Oso Mar 08, 2021 11:51AM ET
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$2800 for my family. Pays off property tax and most of homeowners insurance for this year. Too bad I'll have to pay for it in higher taxes.
Bhagwan Dass
Bhagwan Dass Mar 08, 2021 11:28AM ET
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ABCD companies owner plane will crash I pray to God, giving pain to poor people for higher commodity prices.
Erikas Ivan
Erikas Ivan Mar 08, 2021 11:17AM ET
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Well, it turned green hour ago :)
Bhagwan Dass
Bhagwan Dass Mar 08, 2021 11:13AM ET
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ABCD companies blackmail people of world
Stan Smith
Stan Smith Mar 08, 2021 11:11AM ET
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Too much 'fuel' will eventually cause an implosion
Di Tol
Di Tol Mar 08, 2021 11:01AM ET
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How about we all short this Bubble and see how this goes
Bhagwan Dass
Bhagwan Dass Mar 08, 2021 11:00AM ET
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ABCD four company taking prices of agriculture commodity at new highs. I prayer to God to finish these companies
Ivan Galas
Ivan Galas Mar 08, 2021 10:28AM ET
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“At Open” key words
Kraft KT
Kraft KT Mar 08, 2021 10:22AM ET
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once again the bank won and the flap lost
michael engel
michael engel Mar 08, 2021 10:20AM ET
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1) NDX dropped, but it's > Sept 2 high. 2) Sept high and Sept low are NDX TR. 3) NDX weekly channel  : Aug 24 close to Feb 8 21  close. // a parallel line  from Oct 26 low to last week low.
Kaveh Sun
Kaveh Sun Mar 08, 2021 10:14AM ET
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The jitter is how much bonds they can sell? Soon they have to run the printers at full speed.
Bulent Ok
Bulent Ok Mar 08, 2021 10:14AM ET
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Gold looks like going to moon soon...
Stéphane DeRibz
Stéphane DeRibz Mar 08, 2021 10:14AM ET
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not really
Matt Novakovich
Matt Novakovich Mar 08, 2021 10:14AM ET
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I used to think that way too. you'll get over it
Stan Smith
Stan Smith Mar 08, 2021 10:14AM ET
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Markets and the dollar will soon crash. Where are you going to put your money...it BTC??. lol. That intangible gimmick has an intrinsic value of zero. Pay no heed to the naysayers Gold will eventually be the only REAL asset left standing
Hiro Ito
Hiro Ito Mar 08, 2021 10:07AM ET
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Well Nasdaq is down but they have great earning than recovery stock we still dont know they will able to recover
Fabio falec
falec Mar 08, 2021 10:06AM ET
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Inflation jitters? All commodities are down? If the stimulus would have triggered concerns on Inflation commodities would be up big.  I always think that these reported should be disallowed to write articles if they have a bare minimum competence. Then they post a pointless sequence of numbers that at the very same they are writing are already largely changed. What's the point???
Alexander Scheller
Alexander Scheller Mar 08, 2021 10:06AM ET
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when i saw the article i thought the exact same thing.
Stephen Corsaro
Stephen Corsaro Mar 08, 2021 10:06AM ET
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inflation happens when the ability to produce services and materials and products can't meet demand. Since capacity far outstrips any demand that this stimulation can create it won't happen any time soon.
 
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