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Dow, S&P 500 close at records as tech stocks rally

The Dow and S&P 500 on Monday closed at fresh record highs, spurred by a strong rally in technology stocks that lifted the Nasdaq Composite Index by nearly 1.8 per cent.

NEW YORK: The Dow and S&P 500 on Monday closed at fresh record highs, spurred by a strong rally in technology stocks that lifted the Nasdaq Composite Index by nearly 1.8 per cent.

The Dow Jones Industrial Average jumped 112.13 points (0.68 per cent) to 16,695.47, while the S&P 500 gained 18.17 points (0.97 per cent) to 1,896.65.

The Nasdaq added 71.99 points (1.77 per cent) at 4,143.86.

Analysts said there was no obvious catalyst for the rally, but pointed to a sense in the market that technology stocks had been oversold as investors worried the sector was overvalued. The Nasdaq dropped 6.6 per cent between March 5 and last Friday.

Some money managers "have figured some of these tech stocks have been hammered a little too hard," said Michael James, managing director of equity trading at Wedbush Securities.

Big gains were posted by prominent technology stocks like Facebook (+4.5 per cent), Netflix (+5.1 per cent) and Twitter (+5.9 per cent). Some stocks in biotechnology, another hard-hit sector, also rose, including Biogen (+4.9 per cent) and Celgene (+2.6 per cent).

Still, James detected caution in the market in light of fairly modest trading volumes.

"There's just as many people watching as there are participating today," James said. "I don't feel like there's some huge groundswell of confidence behind this move."

Botox-maker Allergan turned down an unsolicited takeover offer worth about US$45.6 billion from pharmaceutical company Valeant, saying the bid "substantially undervalues" the company.

In response, Valeant, which is working with activist investor William Ackman, asked Allergan for a list of shareholders as part of a plan to take the offer directly to shareholders, according to a Valeant securities filing. Allergan fell 1.0 per cent, while Valeant lost 0.8 per cent.

Pinnacle Foods agreed to be bought by Hillshire Brands in a deal worth US$6.6 billion. The transaction will boost Hillshire's presence in frozen-food categories. Pinnacle jumped 13.2 per cent, while Hillshire fell 3.2 per cent.

Dow component IBM picked up 1.3 per cent ahead of an annual investor day Wednesday. Chief executive Virginia Rometty told The New York Times that IBM is making progress building new business lines despite facing a "rocky time." Revenues have declined for eight quarters in a row at the tech giant.

Bond prices fell. The yield on the 10-year US Treasury rose to 2.66 per cent from 2.63 per cent on Friday, while the 30-year increased to 3.49 per cent from 3.46 per cent. Bond prices and yields move inversely.

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