# Nasdaq books biggest daily gain in 5 months as falling bond yields fuel tech bounce

What’s driving the market?

A recent run-up in yields has been fueling a rotation away from growth-oriented stocks, including many of the highflying tech-related shares that boomed during the pandemic-inspired lockdowns.

Investors have been using the proceeds to pile into shares of more cyclical and value-oriented stocks and sectors that are seen as poised to benefit most from a wider reopening of the economy.

But that dynamic was put on hold Tuesday as the yield on the 10-year Treasury note
TMUBMUSD10Y,
1.532%
fell around 5 basis points to 1.545%, after trading around 1.60% on Monday. Yields and bond prices move in opposite directions.

Before Tuesday, it was rising yields that had sparked an exodus from shares that had surged during the recovery from the pandemic lows set nearly a year ago.

“The cyclical rotation has been running strong for months and today is an overdue buying the dip for technology stocks. The move in tech stocks coincides with the rally in Treasuries, so many traders will be skeptical that this rebound will stick,” said Edward Moya, senior analyst at Oanda.

Meanwhile, the House is expected this week to provide final approval of a $1.9 trillion package of COVID relief spending, giving President Joe Biden an early political victory and stoking expectations for a surge in economic growth later in 2021, accelerating a reopening fueled by vaccine rollouts and past doses of stimulus.

That same dynamic has fed the rise in bond yields as investors look for at least a near-term surge in inflation.

“Investors have become increasingly worried that a rapid acceleration of activity could trigger inflation. Yes, inflation is likely to increase in the short-term due to base effects compared to last year’s global lockdowns, supply chains bottlenecks and higher energy prices,” said Esty Dwek, head of global market strategy at Natixis Investment Managers. 

But Dwek said there still remained plenty of slack in the labor market, with unemployment rates far away from falling back to pre-pandemic levels.

Investors will get a look at inflation data later this week, but the economic calendar was light on Tuesday. The National Federation of Independent Business said its closely followed optimism index edged up to 95.8 last month from 95 in January.

Which companies are in focus?

• Tesla Inc.
  TSLA,
  +19.64%
  shares finished up nearly 20% Tuesday after upbeat car sales data out of China. Shares snapped a five-day losing streak that saw them drop 21.6% through Monday,

• Shares of GameStop Corp.
  GME,
  +26.94%
  jumped 27% to trade above $200 again, building on Monday’s 41% gain, which came after the company said it has created a new strategy committee to identify ways to accelerate its transformation. 

• Other stocks, which, like GameStop, were heavily promoted on Reddit’s WallStreetBets forum also rose Tuesday, including movie-theater chain AMC Entertainment Holdings Inc.
  AMC,
  +13.02%,
  BlackBerry Ltd.
  BB,
  +7.18%,
  and Naked Brand Group Ltd.
  NAKD,
  +4.08%.

• Shares of Dick’s Sporting Goods Inc.
  DKS,
  -6.34%
  slumped 6.3% after reporting fourth-quarter results Tuesday morning.

• Stitch Fix Inc.
  SFIX,
  -28.15%
  shares plunged over 28% after the retailer reported fiscal second-quarter sales that missed Wall Street expectations.

• Walt Disney Co.’s
  DIS,
  -3.66%
   Disney+ streaming service has topped 100 million global paid subscribers since its launch in November 2019, Chief Executive Bob Chapek said. Disney shares fell 3.7%

What are other markets doing?

• The ICE U.S. Dollar Index
  DXY,
  -0.37%,
  a measure of the currency against a basket of six major rivals, was down 0.4% after hitting a more-than-three-month high on Monday.

• Oil futures pulled back in choppy trade, with the U.S. benchmark losing $1.04, or 1.6%, to settle at $64.01 per barrel.

• Gold futures
  GC00,
  +2.19%
  were buoyed as Treasury yields and the dollar retreated, bouncing 2.3% to $1,716.60 an ounce.

• The pan-European Stoxx 600
  SXXP,
  +0.76%
  closed 0.8% higher and London’s FTSE 100
  UKX,
  +0.17%
  gained 0.2%, with gains capped by a 0.6% rise in the British pound
  GBPUSD,
  +0.48%.

• In Asia, the Shanghai Composite
  SHCOMP,
  -1.82%
  stumbled 1.8%, while Hong Kong’s Hang Seng Index
  HSI,
  +0.81%
  rose 0.8% and Japan’s Nikkei 225
  NIK,
  +0.99%
  rallied 1%.