US Indices Edge Higher As Tech Stocks Rally, Bond Yield Drops

Source: Anikin Denis,Shutterstock

Summary

• S&P 500 rose 1.42%, Dow Jones was up 0.10%, and NASDAQ gained 3.69%.
• The 10-year Treasury bond yields declined 3.59% to 1.537 on Tuesday.
• Zoom Video’s Eric Yuan transfers US$6 billion worth of his shares to unspecified recipients.

US stocks closed higher on Tuesday as shares of major tech companies, which were under relentless selling pressure last week, bounced back strongly amid a pause in bond yields and a positive outlook.

The S&P 500 was up 1.42% to 3875.44. The Dow Jones Industrial Average was up 0.10% to 31832.74. The NASDAQ Composite Index gained 3.69% to 13073.82, and the small-cap Russell 2000 rose 1.91% to 2245.06.

Tech stock futures maintained their ascent through the day after a solid start. Stocks of other key industry segments have also made significant advances during the session. The uptick came as the US Senate passed a new covid bill, authorizing the government to start spending.

President Joe Biden’s $1.9 trillion stimulus package is the third tranche and so far, the biggest government intervention in covid relief. The first installment of US$1.7 trillion was released in March 2020, followed by US$915 billion in December 2020, under the then Trump administration.

It allocates billions of dollars for covid control, besides help to small businesses and needy Americans who have been badly hit by the pandemic. Eligible households will receive a monthly stimulus check of $1,400 per person until September from the government.

The OECD, a Paris-based 37-member grouping, said on Tuesday the US rescue plan will help expand the global economy by 5.6 percent this year, which is an increase of 1.4 percentage points from its previous estimate. The plan will add at least 1 percentage point to global economic growth, it noted.

In the run-up to the passage of the bill, US markets have witnessed increased volatility, leading to a sharp decline in blue-chip stocks, in contrast to a strong rise in bond yields. While the selloffs in Treasury bonds pointed at investors’ optimism about a strong recovery, it also raised concerns about Fed interest rate hikes to stem any future inflation in some quarters. The 10-year Treasury bond yields declined 3.59% to 1.537 on Tuesday after seeing successive gains in recent days.

In another sign of growing confidence in the economy, the Federal Reserve on Monday said that it will let three of its special lending programs expire at the end of this month. These banking measures were introduced to stabilize the financial system because of the pandemic.

In the corporate world, the Amazon-backed food delivery app Deliveroo, which plans to debut on the London stock exchange in April, said that its gross profit margins may drop to around 7 percent this year, compared to the figures in 2020, as the pandemic restrictions are gradually lifted. The online food delivery company saw a 64 percent jump in sales last year due to covid.

Zoom Video founder Eric Yuan has revealed in a securities filing that he transferred some 40 percent of his ownership in the firm, or $6 billion worth of shares, to unspecified recipients. The transactions were in two parts of nearly 9 million shares each. Zoom shares had almost tripled last year.

Basic materials, financials, utilities, industrials, consumer non-cyclicals, real estate, consumer cyclicals, energy, healthcare, and technology stocks saw subdued gains on Monday.

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Also read: GameStop Stock Jumps on E-Commerce Shift & Ryan Cohen’s Appointment

Top Gainers

Top performers on S&P 500 included Tesla Inc (19.64%), Enphase Energy Inc (12.60%), Teradyne Inc (8.77%), and ETSY Inc (8.69%). On NASDAQ, top performers were Tesla Inc (19.64%), Peloton Interactive Inc (14.47%), Baidu Inc (13.58%), and Pinduoduo Inc (12.05%). On Dow Jones, Intel Corp (4.71%), Apple Inc (4.06%), Boeing Co (2.94%), and Microsoft Corp (2.81%) were among the leaders.

Top Losers

Top laggards on S&P 500 included APA Corp (US) (-6.78%), Discovery Inc (-6.30%), Nov Inc (-5.34%), and HanesBrands Inc (-5.22%). On NASDAQ, Fox Corp (-4.23%), Marriott International Inc (-2.29%), and O'Reilly Automotive Inc (-1.69%) were the losers. On Dow Jones, Walt Disney Co (-3.67%), American Express Co (-3.44%), Caterpillar Inc (-2.16%), and Dow Inc (-1.86%) were among the laggards.

Image Source: Refinitiv, NASDAQ One Year price chart, March 9, 2021.

Volume Movers

Top volume movers included Apple Inc (30.27mn), General Electric Co (17.71mn), Tesla Inc (13.30mn), Bank of America Corp (11.77mn), Microsoft Corp (11.70mn), Intel Corp (11.57mn), AT&T Inc (10.50mn), Tesla Inc (13.30mn), Comcast Corp (10.20mn), AMD Inc (9.35mn), Cisco Systems Inc (7.34mn), Coca-Cola Co (5.58mn), Verizon Communications Inc (4.94mn), and Chevron Corp (4.86mn).                                        

Futures & Commodities

Gold futures were up 2.19% to $1,714.75 per ounce, silver prices rose 3.02% to $26.032 per ounce, and copper was down 1.97% to $4.0125.

Brent oil futures were down 1.52% to $67.20 and WTI crude shed 1.95% to $63.78 per barrel.

Bond Market

The 30-year treasury bond yields were down 2.53% to 2.246, while the 10-year bond yields plunged 3.59% to 1.537.

US Dollar Futures Index was down 0.38% to 91.985.

Also read: 4 Dividend-Paying Bank Stocks To Buy & Hold In 2021

In other news, South Korean e-commerce company, Coupang, which is planning a New York listing later this month, has been swamped with police inquiries back home over a series of worker fatalities. Coupang expects a $50 billion valuation after the initial public offering (IPO) on NYSE.

America’s second-largest cellphone company, T-Mobile said on Tuesday that it will share its customers’ mobile app data with advertisers but they can also choose to opt-out. T-Mobile had acquired its competitor Sprint Corp last year. The announcement came even as tech companies, such as Google and Facebook, face increased scrutiny from the US regulators over privacy concerns.