Wall Street 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 2.31 per cent gain to $670 was the fourth-largest boost to the S&P 500 after Ark Invest, founded by star stockpicker Cathie Wood, raised the company’s price target on Friday using 34 inputs in a Monte Carlo model.
Tesla traded more than 6.0 per cent higher during the session before trimming gains.
Growth stocks rose more than 1.43 per cent while value shares slid 0.07 per cent in a reversal of this year’s big rotation in investment portfolios.
A sharp run-up in Treasury yields since mid-February has weighed on high-flying technology stocks that benefit from low yields as investors swarmed into underpriced value stocks from the mega-cap growth stocks that have fuelled the past year’s rally.
An easing off of 14-month highs in the 10-year US Treasury note’s yield after it hit 1.754 per cent 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, both of which posted all-time highs last week on bets that stimulus and vaccine rollouts will likely lead to the strongest US economic growth since 1983.
“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 11.1 per cent 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.
The Dow Jones Industrial Average closed up 103.23 points, or 0.32 per cent, at 32,731.2. The S&P 500 gained 27.49 points, or 0.70 per cent, to 3,940.59 and the Nasdaq Composite added 162.31 points, or 1.23 per cent, to 13,377.54.
Volume on US exchanges was 10.91 billion shares, compared with the 14.3 billion average over the last 20 trading days.
Bank stocks, which have enjoyed a rally on brightening economic prospects, dropped 2.27 per cent.
The S&P 500 tech index jumped 1.93 per cent, while energy and financials closed down 1.01 per cent and 1.30 per cent, respectively.
The iShares MSCI Turkey ETF sank 18.96 per cent after 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 1.18-to-1 ratio; on Nasdaq, a 1.25-to-1 ratio favored decliners.
The S&P 500 posted 12 new 52-week highs and no new lows; the Nasdaq Composite recorded 99 new highs and 30 new lows.