Dow sets new record as Nasdaq sinks into correction

The Dow Jones Industrial Average set a record high Monday as stocks of companies expected to benefit from the end of the pandemic soared while a tech selloff caused the Nasdaq to fall.

The Dow ended Monday with a gain of more than 300 points, rising 1 percent to close at 31,802.44 after hitting a new peak of 32,148.04 before the closing bell. The Nasdaq fell 2.4 percent and the S&P 500 closed with a loss of 0.5 percent.

Monday’s losses also put the Nasdaq into correction territory for 2021 — a 10 percent decline from its 52-week high.

Disney led the Dow’s gains Monday with a 6.2 percent increase, with Walgreens, Visa, Goldman Sachs, American Express and Home Depot rising roughly 2 percent each. Declines in Zoom, Apple, Facebook, Alphabet and dozens of other technology companies tanked the Nasdaq.

While the Dow and Nasdaq often move in the same direction, the two major indexes have split frequently throughout the pandemic.

The Nasdaq is dominated by technology companies that raked in major profits throughout the pandemic, while the Dow includes a higher proportion of retailers, financial firms, leisure and travel companies hit hard by COVID-19.

The Dow and Nasdaq typically diverge when the outlook for the pandemic or recovery from the recession it caused appears to have changed, whether because of positive news about the fight against COVID-19, the progress of federal relief efforts or economic data.

“There’s a reassessment going on, with many investors taking profit after the long rally in this neighborhood of the market,” wrote JJ Kinahan, chief market strategist at TD Ameritrade.

The Senate on Saturday passed its version of President Biden’s $1.9 trillion economic relief and pandemic response plan. The bill now heads to the House, which is aiming to pass it by Wednesday, before it reaches Biden’s desk.