U.S. stocks rose on Tuesday after a decline in bond yields caused investors to rotate back into the beaten-up technology sector.
The Nasdaq Composite climbed 3.69% to 13,073.82 for its best day since November. Tesla soared 19.6% after a five-day losing streak and posted its biggest one-day pop since February 2020. Apple and Facebook jumped more than 4% each, while Microsoft and Netflix both gained at least 2.5%. Amazon rose 3.8%. The tech-heavy benchmark rallied as much as 4.3% during the session.
The S&P 500 advanced 1.4% to 3,875.44. The Dow Jones Industrial Average closed the day near its session low, rising just 30.30 points, or 0.1%, to 31,832.74. At its session high, the blue-chip benchmark jumped more than 300 points to touch an intraday record high.
Technology shares rebounded from steep losses as bond yields stabilized. The 10-year Treasury yield fell more than 5 basis points to 1.54%. The benchmark rate traded as high as 1.62% on Monday.
"After lagging badly for the last few weeks, growth/momentum stocks are exploding higher as investors grow a bit more comfortable around rates and step in to buy this erstwhile most-loved sector," Adam Crisafulli, founder of Vital Knowledge, said in a note.
The Nasdaq shed 2.4% in the previous session to close more than 10% below its Feb.12 high and falling into correction territory. High-growth names have been pressured lately as rising rates make their future profits less valuable today, making it hard to justify the stocks' lofty valuations.
Many popular technology stocks have fallen double digits over the past month amid rate fears. Even with Tuesday's rally, Apple dropped more than 10% in the past month, while Tesla tumbled 20%. Pandemic bets Zoom Video and Peloton fell 20% and 36%, respectively, during the same period.
"A lot of these tech stocks have become oversold on a short-term basis. Therefore, it's not a big surprise that they're seeing a nice bounce," said Matt Maley, chief market strategist at Miller Tabak. "The question will be whether this bounce is a strong one...or a 'dead cat bounce' that doesn't last very long at all."
Widely followed investor Cathie Wood of Ark Investment Management told CNBC on Monday that the recent tech sell-off created "great opportunities" for her to buy the pure play names in her funds, which are concentrated in disruptive technology stocks.
Meanwhile, the rally in reopening plays and cyclical stocks took a breather on Tuesday. Energy was the biggest loser with a 1.9% decline, paring its March gains to about 8%. Financials and industrials also underperformed Tuesday.
Senate approval of the $1.9 trillion economic relief and stimulus bill had prompted investors to continue to rotate into these areas of the market to bet on an economic rebound. House Democrats aim to pass the bill on Wednesday so President Joe Biden can sign it by the weekend.