NEW YORK: U.S. stocks rallied on Monday as technology stocks rebounded from a recent selloff sparked by surging bond yields and Tesla jumped after a fund run by an influential investor in the electric-car maker said its shares could approach $3,000 by 2025.
Tesla Inc’s 5.6% gain to $691.46 provided one of the biggest boosts to the S&P 500 and Nasdaq after Ark Invest, founded by star stockpicker Cathie Wood, raised its price target on Friday using 34 inputs.
Growth stocks rose 1.82% while value shares were flat.
A sharp run-up in Treasury yields since mid-February has weighed on high-flying technology stocks that benefit from low yields and led to a rotation into underpriced value stocks from growth stocks that have fueled the past year’s rally.
An easing off of 14-month highs in the 10-year U.S. Treasury note’s yield after it hit 1.754% last week has allowed tech shares to bounce back, said Tom Hayes, chairman of hedge fund Great Hill Capital LLC in New York.
“It’s going to look like tech and growth is back but I think it will be much more moderate than people think,” Hayes said. “There’s a plethora of growth, growth across many sectors, and we’ve seen managers bidding those (shares) up in cyclicals and value. I think that persists over the next 18 months,” he said.
The tech-heavy Nasdaq outpaced the S&P 500 and the Dow, which posted all-time highs last week on bets that stimulus and vaccine rollouts would lead to a strong rebound in the U.S. economy.
“The technology stocks are pretty beaten down and it’s not shocking to see those rebounding a little bit from their lows,” said Jake Wujastyk, chief market analyst and founding member of TrendSpider.
Kansas City Southern surged 12.5% after Canadian Pacific Railway Ltd agreed to acquire the railroad operator in a $25 billion cash-and-stock deal to create the first railway spanning the United States, Mexico and Canada.
At 2:31 p.m. EDT, the Dow Jones Industrial Average rose 148.47 points, or 0.46%, to 32,776.44, the S&P 500 gained 38.84 points, or 0.99%, to 3,951.94 and the Nasdaq Composite added 231.18 points, or 1.75%, to 13,446.42.
Bank stocks, which have enjoyed a rally on brightening economic prospects, dropped almost 2%.
The S&P 500 tech index jumped about 2.35%, while energy and financials were in the red.
The iShares MSCI Turkey ETF sank about 20% as President Tayyip Erdogan’s decision to oust a hawkish central bank governor sparked fears of a reversal of recent rate hikes.
Declining issues outnumbered advancing ones on the NYSE by a 1.05-to-1 ratio; on Nasdaq, a 1.10-to-1 ratio favored decliners.
The S&P 500 posted 11 new 52-week highs and no new lows; the Nasdaq Composite recorded 87 new highs and 23 new lows.
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