Tech stocks closed higher on Tuesday, with the Nasdaq Composite index climbing back to positive territory following an alarming correction.
Market participants focused on the stocks of the companies that had suffered the most from the sell-off. For example, shares of such tech giants as Tesla, PayPal, Nvidia and many others showed a sharp increase following a prolonged decline. It is obvious that today investors are switching from growth stocks to corporate securities which will definitely strengthen against the backdrop of economic recovery.
The technology sector has been in a rather challenging situation lately due to a surge in US Treasury yields. This made investors think about high ratings in the technology sector. Later, sales in the bond market declined and then completely stopped. Thus, on Tuesday, the yield on the 10-year US Treasury note fell to 1.538%, while the day before it settled at 1.594%, its highest level in more than a year.
Experts are confident that the latest regulations in the Treasury market will help tech stocks recover to their previous levels. At the same time, many companies making up the sector will grow on the increasing popularity of online shopping and in-home online content consumption, despite some eased quarantine restrictions.
Obviously, investors have not changed their attitude towards the tech sector in the long term. Market participants are sure that shares of tech companies will strengthen again. Moreover, they attribute their recent fall to unreasonably sky-high stock prices.
On Tuesday, the Nasdaq closed the New York Stock Exchange with a 3.7% gain, rising to 13,073.82. The S&P 500 surged by 1.4% to 3875.47. The Dow Jones Industrial Average added 0.1% and settled at 31832.08. Notably, on Monday, the DJIA reached the second highest level on record.
The top performers in the S&P 500 turned out to be shares of US electric vehicle maker Tesla which soared by 19%. The company managed to pare its monthly losses which are now less than 30%. Video-streaming device maker Roku Inc's stock advanced by 10%, while shares of Square Inc, a developer of payment processing solutions, gained 11%.
Apple shares rose by 4.4%, Amazon added 4.3%, and Facebook was up 5%.
Ten out of eleven sectors making up the S&P 500 also reported strong gains. At the same time, stocks of energy and financial companies dipped by 1%.
Shares of US video games retailer GameStop soared by 21% for the second day in a row. The euphoria was caused by the news that the company's board had formed a committee focused on the company's transformation efforts that would be headed by Chewy Inc. co-founder Ryan Cohen.
The pan-European Stoxx 600 gained 0.8%.
The main indices of the Asia-Pacific region traded mixed on Tuesday. Thus, the Shanghai Composite slipped 1.8%, South Korea's Kospi lost 0.7%, while Japan's Nikkei 225 rose by 1%.
US lawmakers are likely to pass a new $1.9 trillion stimulus package this week. This prospect has improved investor confidence in faster economic recovery and growing demand for shares of companies hit hard by the COVID-19 pandemic (banks, oil and gas, as well as travel companies).
