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U.S. Stocks Close Starkly Mixed Amid Increase In Bond Yields

wallst 032918 08mar21 lt

Stocks turned in a starkly mixed performance during trading on Monday, as the Dow jumped to a new record intraday high but the tech-heavy Nasdaq showed a sharp pullback. The S&P 500 spent much of the day in positive territory before closing in the red.

The Dow ended the session well of its best levels of the day but still closed up 306.14 points or 1 percent at 31,802.44. Meanwhile, the Nasdaq plunged 310.99 points or 2.4 percent to 12,609.16, its lowest closing level in almost three months, and the S&P 500 slid 20.59 points or 0.5 percent to 3,821.35.

The mixed performance on Wall Street came in reaction to news the Senate voted along party lines on Saturday to approve a new $1.9 trillion coronavirus relief bill.

The bill, which includes $1,400 direct payments and an extension of unemployment benefits, is expected to be approved by the House later this week.

Democrats were forced to use the reconciliation process to pass the legislation without any Republican support, although a new relief package was always widely expected on Wall Street.

Passage of the stimulus bill contributed to an increase in treasury yields, inspiring traders to rotate out of high-flying tech stocks and into cyclicals.

The ten-year yield pulled back after reaching an intraday high above 1.6 percent but still ended the session at its highest closing level in over a year.

On the U.S. economic front, a report released by the Commerce Department showed wholesale inventories in the U.S. jumped in line with economist estimates in the month of January.

The Commerce Department said wholesale inventories spiked by 1.3 percent in January after climbing by an upwardly revised 0.6 percent in December.

Economists had expected wholesale inventories to surge up by 1.3 percent compared to the 0.3 percent increase originally reported for the previous month.

Sector News

Airline stocks showed a substantial move to the upside on the day, driving the NYSE Arca Airline Index up by 4.8 percent.

Significant strength was also visible among telecom stocks, as reflected by the 2.6 percent jump by the NYSE Arca North American Telecom Index.

Housing, banking and oil service stocks also saw considerable strength, with the gains by oil service stocks coming despite a pullback by the price of crude oil.

On the other hand, semiconductor stocks showed a significant move to the downside, dragging the Philadelphia Semiconductor Index down by 5.4 percent to its lowest closing level in two months.

Software and biotechnology stocks also saw notable weakness on the day, contributing to the steep drop by the Nasdaq.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly lower during trading on Monday. Japan's Nikkei 225 Index fell by 0.4 percent, while China's Shanghai Composite Index plunged by 2.3 percent.

Meanwhile, the major European markets showed strong moves to the upside on the day. While the German DAX Index spiked by 3.3 percent, the French CAC 40 Index surged up by 2.1 percent and the U.K.'s FTSE 100 Index jumped by 1.3 percent.

In the bond market, treasuries moved to the downside in reaction to the Senate passage of the stimulus bill. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, rose by 4.2 basis points to 1.596 percent.

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