Dow Jones Industrial Average futures jumped 179 points, or 0.6%. S&P 500 futures added 1%.
But the big move was in futures for the tech-heavy Nasdaq 100, which jumped 2.5%. Tesla shares popped 5% in premarket trading, while Apple, Amazon, Microsoft, Netflix and Alphabet all gained at least 2%.
Technology shares are set to rebound from sharp losses as bond yields stabilized. The 10-year Treasury yield fell more than 6 basis points to 1.52%. It traded as high as 1.62% on Monday.
On Monday, the Dow rallied more than 300 points on investor optimism about the economic comeback from the pandemic. Yet tech shares didn’t participate on Monday, with the Nasdaq Composite shedding 2% as a rapid rise in rates caused investors to rotate out of pricey tech shares. The tech benchmark closed more than 10% below its Feb.12 closing high, falling into correction territory.
“Right now the market is broadening out and we think in an underlying sense the bull market is strengthening and that will play to our benefit over the longer term,” said Cathie Wood of Ark Investment Management on CNBC’s “Closing Bell” on Monday.
“We are getting great opportunities” in the sell-off to buy the pure play names in the funds, added Wood, who focuses on disruptive technology stocks.
High-growth names have been pressured lately as rising rates make their future profits less valuable today, compressing the stocks’ lofty valuations. However, hedge fund manager David Tepper said on Monday the recent sharp rise in rates is likely over and it’s hard to be bearish on stocks right now. Tepper noted names like Amazon were starting to look attractive.
Over the weekend, the Senate passed a $1.9 trillion economic relief and stimulus bill, which is set to include another round of stimulus checks. Banks, airlines, cruise lines and retailers all rose on Monday amid hopes of a sharp economic rebound. President Joe Biden is expected to sign the bill into law by March 14.
Monday’s “initial rally was due primarily to news over the weekend that President Biden’s relief package had passed,” Jim Paulsen, chief investment strategist at the Leuthold Group, told CNBC. “Ultimately, however, equity investors are currently obsessed with bond yields keeping the Nasdaq and S&P 500 technology sector under pressure all day. Since the 10-year bond yield failed to pull back from the 1.6% level near the close today, eventually pressure on technology stocks intensified going into the close.”
“Nonetheless, most of the stock market had a nice day as small caps stocks and several reopening sectors posted healthy gains,” added Paulsen.
The small-cap benchmark Russell 2000 gained about 0.5% on Monday.
Read More: Nasdaq futures jump 2.5% as bond yields retreat, Dow futures gain 170 points