Investing.com – The Dow hit all-time highs on Monday, as investors upped bets on cyclical stocks offsetting a malaise in tech as the economy is set for a further boost after the Senate approved the $1.9 trillion stimulus relief package.
The $1.9 trillion stimulus package, which is expected to signed into law before a March 14 deadline to renew unemployment support measures, stoked investor optimism of a more robust economic recovery.
“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 United States 5-Year.
The sharp uptick in rates continued to weigh on tech stocks, but investors appear to be positioning for a rebound in the sector amid fading fears that the melt-up in rates will be disorderedly.
“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 sizable operating leverage, to boost earnings well beyond record levels set in 2019,” Wells Fargo.
Mega cap tech stocks were in the red, though off their lows for the day.
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 33% 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.