The S&P 500 and the Dow rose on Monday, led by stocks poised to benefit the most from an economic rebound as the US Senate passed the $1.9 trillion COVID-19 relief package, while heavyweight tech-related stocks clawed back some losses.
President Joe Biden said he hoped for a quick passage of the revised bill by the House of Representatives so he could sign it and send $1,400 direct payments to Americans.
Prospects of more government spending and faster economic growth have stoked fears of a spike in inflation, sending the benchmark 10-year Treasury yield to near one-year highs. US Treasury Secretary Janet Yellen, however, said the package would fuel a "very strong" US recovery and that she did not expect the economy to run too hot because of the increased spending.
Most tech-related stocks, including Facebook Inc, Microsoft Corp, Tesla Inc and Amazon.com Inc, rebounded on Monday after being sold off in the past three weeks on fears of higher interest rates after the recent run-up in US bond yields.
"While it's a 'buckle the seat belt' time for tech stocks, we believe this sell-off has created a golden opportunity for investors to own the secular tech winners for the next 3-5 years," said Wedbush analyst Dan Ives.
Tech stocks are particularly sensitive to rising yields because their value rests heavily on earnings in the future, which are discounted more deeply when bond returns go up.
The Russell 1000 growth index that includes technology stocks added about 0.4% in early trading, but still underperformed a 1% rise for its counterpart value index consisting of cyclical stocks such as financials and energy.
Hopes of more fiscal support and signs of faster economic growth on speedy vaccine rollouts had lifted Wall Street's main indexes to record highs last month, but worries that rising inflation could result in a sudden tapering of monetary stimulus have now prompted investors to dump equities.
Materials, industrials and utilities rose the most among major S&P sectors. Technology and energy dropped.
At 10:15 a.m. ET, the Dow Jones Industrial Average rose 301.33 points, or 0.96%, to 31,797.63, the S&P 500 gained 19.96 points, or 0.52%, to 3,861.90 and the Nasdaq Composite gained 1.84 points, or 0.01%, to 12,923.02.
Banks added about 0.8% as the yield on the benchmark 10-year note stood near a 13-month high, while airlines jumped about 3%.
Wall Street's fear gauge rose 1 point to 25.66.
Walt Disney jumped about 3% as California health officials set new rules that would allow Disneyland and other theme parks, stadiums and outdoor entertainment venues to reopen as early as April 1.
GameStop Corp surged about 14% after the company said it had tapped shareholder Ryan Cohen to lead a transition to an e-commerce business.