The Nasdaq Composite advanced 3% last week, despite a sell-off on Friday spurred by rising interest rates. The jump in bond yields has challenged growth stocks in recent weeks and sent investors into cyclical pockets of the market. The Nasdaq is up less than 1% this month, while the Dow and S&P are up 6% and 3.5%, respectively. The U.S. 10-year Treasury hit its highest level in more than a year on Friday. The benchmark Treasury note reached 1.642%, its highest level since February 2020.
The small-cap benchmark Russell 2000 surged more than 7% last week as investors rotated into smaller stocks that benefit from a sharp economic comeback. Last week, investors cheered the $1.9 trillion stimulus package that President Joe Biden signed into law. The IRS started processing $1,400 direct payments on Friday and checks started hitting bank accounts over the weekend. The bill will also put nearly $20 billion into Covid-19 vaccinations and $350 billion into state, local and tribal government relief.