US STOCKS-Nasdaq surges 3% as tech stocks roar back

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* Rally in bank stocks cool as bond yields ease
* GameStop builds on Monday's 40% surge
* Indexes up: Dow 0.83%, S&P 1.82%, Nasdaq 3.44%

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By Shashank Nayar and Medha Singh
March 9 (Reuters) - U.S. stocks advanced on Tuesday, with
the Nasdaq jumping over 3% to recoup its losses from the
previous session, as U.S. bond yields retreated and investors
picked up battered technology stocks.
Tesla Inc TSLA.O jumped about 14%, while Apple Inc
AAPL.O , Amazon.com Inc AMZN.O and Microsoft Corp MSFT.O
gained between 2.3% and 3.4% after sharp losses in recent weeks
as a rise in yields raised concerns over their high valuations.
"Usually when things are significantly sold off, like the
tech sector, traders tend to buy in," said Matthew Stucky,
portfolio manager at Northwestern Mutual Wealth Management.
Signs that a $1.9 trillion coronavirus relief package was
nearing final approval sparked a spike in yields on Monday,
pushing the tech-heavy Nasdaq to end more than 10% below its
Feb. 12 closing high that confirmed a correction.
U.S. 10-year Treasury bond yields US10YT=RR eased to 1.54%
after hovering near 13-month highs of 1.613% in the prior
session. Longer-dated yields have jumped over the last month as
investors price in a faster-than-expected economic rebound and
higher inflation.
Higher yields can weigh on tech and growth stocks with lofty
valuations, as they threaten to erode the value of their
longer-term cash flows.
"Potential headwind for the market is (when) interest rates
rise further from this point over the short period ... since
they have risen too fast in too little time," said Michael
Sheldon, chief investment officer at RDM Financial in Westport,
Connecticut.
At 11:39 a.m. ET, the Dow Jones Industrial Average .DJI
rose 263.71 points, or 0.83%, to 32,066.15, the S&P 500 .SPX
gained 69.44 points, or 1.82%, to 3,890.79 and the Nasdaq
Composite .IXIC gained 433.62 points, or 3.44%, to 13,042.78.
The rise in yields has accelerated a rotation from
"stay-at-home" winners to stocks primed to benefit from an
economic reopening, setting the blue-chip Dow .DJI on pace to
end at a record high on Tuesday.
While the Russell 2000 growth index .RLG jumped over 3.2%
on Tuesday, compared to a 0.7% rise in Russell 2000 value index
.RLV , it sharply underperformed its value counterpart since
the start of the month.
The global economic outlook has brightened as vaccine
rollouts gain speed and the United States launches a massive new
stimulus package, the Organisation for Economic Cooperation and
Development said, hiking its 2021 growth forecasts. The U.S. House of Representatives will take up the relief
bill on Wednesday, with the chamber's expected approval allowing
the Democratic president to sign the legislation into law later
this week. The bank index .SPXBK dropped 0.6% after vaulting to a new
14-year peak. Economy-linked financials .SPSY , materials
.SPLRCM and industrials .SPLRCI hovered near record highs.
GameStop GME.N was up 22%, building on Monday's rise of
over 40% on the video retailer's e-commerce strategy and
speculation that small investors will pour stimulus checks into
markets. Advancing issues outnumbered decliners by a 2.4-to-1 ratio
on the NYSE and by a 3.5-to-1 ratio on the Nasdaq.
The S&P 500 posted 34 new 52-week highs and no new low,
while the Nasdaq recorded 234 new highs and 20 new lows.