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Dow climbs 290 points to close at another record, surging yields hit tech stocks again

The Dow Jones Industrial Average jumped to another record high on Friday as rising reopening optimism continued to encourage the rotation into cyclical stocks. Meanwhile, surging bond yields rekindled valuation fears and took the comeback momentum out of tech names.

The 30-stock benchmark climbed 293.05 points, or 0.9%, to close at a record at 32,778.64. Bank stocks gained amid rising rates, while industrials continued their strength on the back of new stimulus. Goldman Sachs shares jumped 2%, and JPMorgan climbed 1.2%. Boeing and Caterpillar popped 6.8% and 4.2%, respectively.

The S&P 500 erased earlier losses and inched up 0.1%, eking out a record close of 3,943.34. Tech and communication services were the only two sectors registering losses. The Nasdaq Composite shed 0.6% as rates surged. Alphabet and Facebook dropped 2% each, while Apple, Amazon and Microsoft all closed in the red.

The 10-year Treasury yield jumped 10 basis points to 1.64% at its session high Friday, hitting its highest level since February 2020. The benchmark rate started 2021 at around 0.92%.

The rapid rise in bond yields prompted investors to dump the Nasdaq names again after a brief rebound earlier this week. Sharp increases in interest rates can put outsized pressure on high-growth tech stocks as they reduce the relative value of future profits.

The tech-heavy Nasdaq has underperformed the Dow for four straight weeks — a first since 2016

Investors are finally rotating out of tech stocks after a decade of outperformance.

For the fourth straight week, the tech-heavy Nasdaq Composite trailed the Dow Jones Industrial Average. It’s the longest such streak since April-May 2016, which was also the only year since 2011 that the Dow beat the Nasdaq.

The Dow Industrials rose 4.1% for the week to close at a record 32,778.64. After three straight weeks of declines, the Nasdaq climbed 3.1% to 13,319.87. For the year, the Dow is up 7.1%, while the Nasdaq has gained 3.4%.

Reference: CNBC