Gains for major tech companies powered a 3.7% surge in the Nasdaq on Tuesday, the largest jump for the index since November.
The latest swing came a day after the tech-driven index sank more than 10% below its February peak.
The Nasdaq closed up 3.69%, to 13,073. The S&P 500 advanced 1.4%, to 3,875, and the Dow Jones industrial average closed near its session low, rising just 30 points, or 0.1%, to 31,832. At its session high, the Dow jumped more than 300 points to reach an intraday record high.
The Russell 2000 index of smaller companies rose 42.07 points, or 1.9% to 2,245.06.
Roughly a quarter of the index’s members surging more than 5%. Shares of Tesla Inc., which had fallen more than 30% from January levels, soared 20%. Stay-at-home market darlings Peloton Interactive Inc. and DocuSign Inc. each rose more than 10%.
Apple and Facebook jumped more than 4% each, while Microsoft and Netflix both increased at least 2.5%. Amazon posted a 3.8% increase.
Markets have been adjusting to a rapid increase in long-term interest rates in the bond market over the past few weeks. That has helped pull money out of stocks, particularly tech companies that have been surging through the pandemic as more of daily life moves online. A decline in bond yields Tuesday helped put that trend in reverse, perhaps temporarily.
The rising prospects for turbocharged economic growth have been reordering the market’s winners and losers for the past two months as the stimulus bill’s passage grew more likely and daily vaccinations surged. Tuesday, dip buyers targeted the areas recently abandoned as too expensive. The reversal is a theme that’s played out for years, every retreat gets bought, and it’s been extreme lately. The S&P 500 hasn’t had a pullback of 5% since November.
The drop in Treasury yields after the recent violent run-up has given some cover for risk takers to wade back into growth after abandoning the group because stretched valuations began to look scary with rates on the rise.
“Let’s not forget that less than a year ago traders interpreted one of the biggest negative macro events in market history as a buying opportunity, so there’s little reason to think otherwise given all the positive signals around us today,” said Chris Larkin, managing director of trading and investing product at E*Trade Financial. “Corrections create natural inflection points for traders. It’s no surprise to see the Nasdaq rise today, and the fundamentals support continued bullishness.”