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

Technology-related shares sold off on Monday in a big downturn that pushed the Nasdaq into a correction and offset stocks that rose on hopes the $1.9 trillion COVID-19 relief bill will spur the U.S. economic recovery.

The Dow hit a record intra-day high but the big tech stocks that have led Wall Street to scale successive peaks over the past year fell, with the Nasdaq closing down 2.41%. The Nasdaq is now down 10.6% from its Feb. 12 record close, or more than a 10% slide the market considers a correction.

Shares related to finance, restaurants and travel rose on expectations those sectors will do well when the economy reopens, but they were unable to offset the weight of the bigger tech shares that dominate the U.S. stock market.

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

But prospects of more government spending and a growing economy have stoked fears of an inflation spike, sending the benchmark 10-year Treasury yield to near one-year highs and weighing on technology shares that rely on cheap funding for growth.

U.S. Treasury Secretary Janet Yellen 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.

As bonds yields have moved up, 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.AmerisourceBergen Corp gained 7.3% after the U.S. drug wholesaler said it would buy Walgreens Boots Alliance’s drug distribution business for $6.5 billion to expand in Europe. Dow component Walgreens rose 4%.

Advancing issues outnumbered decliners for a 2-to-1 ratio on the NYSE and a 2.5-to-1 ratio on the Nasdaq.

The S&P 500 posted 75 new 52-week highs and no new low, while the Nasdaq recorded 370 new highs and 13 new lows.

Holders of a short position in stocks must disclose it to EU regulators and Bassi said potential changes could include publishing which stocks have short positions on a weekly or fortnighly basis.

“We could think of rules clarifying the duties of brokers or investment advisors and their firms when they participate in online chat rooms,” Bassi said.

Maijoor said there were only 20 stocks in Europe with net short positions of above 10%, limiting the risk of a GameStop-style short squeeze.

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