Dow rises 400 points to touch a record, S&P 500 is flat amid tech sell-off

U.S. stocks climbed on Monday as investors piled into economic comeback plays after Senate approval of a new Covid stimulus package, while a sell-off in high-flying tech shares resumed.

The Dow Jones Industrial Average gained 420 points to hit an intraday record high. The S&P 500 erased a 1% gain to trade 0.1% lower, dragged down by tech. The Nasdaq Composite slid 2% in volatile trading as Apple dropped 3.8% and Tesla fell 5.5%.

The Senate passed a $1.9 trillion economic relief and stimulus bill on Saturday , paving the way for extensions to unemployment benefits, another round of stimulus checks and aid to state and local governments. The Democrat-controlled House is expected to pass the bill later this week. President Joe Biden is expected to sign it into law before unemployment aid programs expire on March 14.

Meanwhile, the Centers for Disease Control and Prevention said Monday people who’ve been fully vaccinated against Covid-19 can meet safely indoors without masks , further boosting reopening hopes. The positive news boosted stocks banking on a strong economic recovery.

Disney shares added more than 5% after California eased Covid rules , paving the way for Disneyland to reopen on a limited basis in April. American Airlines jumped 4%, while United Airlines popped 6%. Target rose 2.7%

Hedge fund manager David Tepper said the recent sharp rise in rates is likely over and it’s hard to be bearish on stocks right now.

“Basically I think rates have temporarily made the most of the move and should be more stable in the next few months, which makes it safer to be in stocks for now,” Tepper told CNBC’s Joe Kernen , who shared the comments on “Squawk Box.”

The benchmark 10-year yield has risen sharply in recent weeks in anticipation of more stimulus on top of a booming economic recovery. The 10-year Treasury yield rose 4 basis points to 1.6% Monday. The benchmark rate started the calendar year below the 1% mark.

Tepper believes the sell-off in Treasurys that has driven rates higher is likely over as big foreign buyers like Japan are poised to come in. He also said “bellwether” stocks like Amazon are starting to look attractive after the pullback.

Still, tech stocks remained the biggest losers on Monday, continuing the trend for the last few weeks. High-growth stocks, which were among the best performers last year, are particularly vulnerable as higher rates reduce the value of future cash flows.

Apple has fallen nearly 15% in the past month, while Tesla has dropped more than 35% in that period. Pandemic bets Zoom Video and Peloton have tumbled 24% and 30% over the past month.

For March, the Dow Industrials, leveraged more to the reopening, is up 3.1%, while the Nasdaq Composite is off by 2.1%. Meanwhile, the broader S&P 500 is up 0.7%. The S&P 500 remains less than 3% from an all-time high.

“We see higher rates largely as a function of earlier and stronger than expected economic recovery and supportive of our positive equity outlook,” Dubravko Lakos-Bujas, JPMorgan’s chief U.S. equity strategist, said in a note.

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