By Yasin Ebrahim
Investing.com – The Dow closed higher after hitting an intraday record on Monday, as reopening stocks like industrials and financials climbed on bets for a sharp uptick in growth ahead of $1.9 trillion fiscal boost that is expected to pass this week.
The Dow Jones Industrial Average rose 0.97%, or 305 points, and had hit a intraday record of 32,148.04, and the S&P 500 fell 0.50%, Nasdaq Composite fell 2.41%.
The Senate passed the $1.9 trillion stimulus plan on Sunday, and the House will vote on the bill on Tuesday, with many expecting the legislation to be signed into law by March 14 to ensure unemployment relief programs, set to expire in mid-March, don't lapse.
The Senate package includes direct payments of $1,400 per person for families earnings less than $160,000 per year or individuals earning less than $80,000 per year.
"This is a bill that will really provide Americans the relief they need to get to the other side of the pandemic, and we expect the resources here to really fuel a very strong economic recovery," U.S. Treasury Secretary Janet Yellen said in an interview on MSNBC.
The ongoing backdrop for a stronger recovery supported cyclical stocks, which move in tandem with the economy. Materials, industrials, and financials were higher, with latter led by an uptick in the United States 5-Year.
The sharp uptick in rates continued to weigh on tech stocks, but some investors appear to be positioning for a rebound in the sector amid fading fears that the melt-up in rates will be disorderly.
"Our expectation for an improving economic outlook, coupled with strong fiscal stimulus, has the potential to inject near-term inflation concerns into fixed-income markets," Wells Fargo (NYSE:WFC) said. "We expect that the increase in long-term rates will be orderly,."
Wells Fargo lifted its 2021 S&P 500 Index earnings per share estimates to $190 from $175. "We expect that our upwardly revised GDP growth forecast will feed directly into corporate revenues. We look for these positives, coupled with sizeable operating leverage, to boost earnings well beyond record levels set in 2019," Wells Fargo.
Mega cap tech stocks briefly moved off lows of the day, before resuming their decline.
Apple (NASDAQ:AAPL), Microsoft (NASDAQ:MSFT), NASDAQ:AMZN), Alphabet (NASDAQ:GOOGL) and Facebook (NASDAQ:FB) and Amazon.com were lower.
Goldman Sachs (NYSE:GS) added Microsoft (NASDAQ:MSFT) the stock to its conviction buy list, citing a boost from the ongoing digital transformation trend.
Energy, meanwhile, was lagging the broader market rally as oil prices gave up gains following a rally on news that Saudi Arabia's oil facilities were attacked on Sunday.
In other news, GameStop (NYSE:GME) rallied 40% after the company appointed board member and Chewy.com (NYSE:CHWY) founder Ryan Cohen, to lead a new committee on the company's transition to become an e-commerce business.