REUTERS: U.S. stocks rallied on Tuesday, with the Nasdaq gaining about 4per cent to recoup heavy losses from the previous session as U.S. bond yields retreated and investors scooped up battered technology stocks.
U.S. 10-year Treasury note yields eased to as low as 1.523per cent after hovering near 13-month highs of 1.613per cent on Monday. Longer-dated yields have jumped over the last month as investors price in a faster rebound and higher inflation that expected at the start of the year. Rising rates disproportionately hurt high-growth tech companies because they are valued on earnings expected years into the future rather than profits earned in the short term.
The rise in Treasury yields has accelerated a rotation from"stay-at-home" winners to stocks primed to benefit from the economy's reopening, setting the blue-chip Dow on pace to end at a record high on Tuesday. The global economic outlook has brightened as vaccine rollouts gain speed and the United States launches a massive new stimulus package, the Organization for Economic Co-operation and Development said, hiking its 2021 growth forecasts.