Tuesday's Market Minute: Nasdaq In Correction Territory

President Biden’s $1.9 trillion coronavirus stimulus package faces the House this week after the Senate passed the legislation on Saturday. Stocks are responding positively Tuesday morning, most notably the Nasdaq-100 futures (/NQ) which have entered correction territory. We’ve seen rising interest rates put pressure on growth and technology stocks, depressing the Nasdaq-100 Index (NDX) that on Monday closed down more than ten percent off February 12’s closing high. This morning, however, those interest rates are falling off, and investors are buying the dip in the beaten-down tech stocks. Investors’ focus Tuesday will remain on bond yields and the NDX to see if it can recover from correction territory.

To put the major index selling off into context: the shares closed Monday at levels last seen in November 2020. The chart isn’t very scary when the index’s returns are taken into consideration. We’ve seen gains of more than 50 percent out of the Nasdaq over the past year. The only other major stock index to outperform it is the Russell 2000 (RUT). Usually, it’s an either/or situation with the NDX and RUT. When one is soaring, the other is dragging. However, now that both are leading the charge, investors will see if an economic rotation continues to pull down tech and bolster small caps, or if both indices can see gains simultaneously.

Photo by Patrick Weissenberger on Unsplash