Stocks ended mixed on Monday and Treasury yields climbed further after Congress made headway toward passing another significant COVID-19 relief package. The Dow surged to reach a record intraday high before paring some gains to end about 300 points, or 1%, higher on the day. The Nasdaq declined by 2%, adding to recent losses after the index closed out its third straight weekly decline last week amid a drawdown in tech and growth stocks. The tech-heavy index sank into a correction as of market close, dipping more than 10% from its recent record closing high from February 12. Defiance ETFs Co- founder & CIO Sylvia Jablonski and Katie Stockton, Founder and Managing Partner of Fairlead Strategies, joined Yahoo Finance Live to discuss.

Video Transcript

JEN ROGERS: Welcome back to Yahoo Finance Live, which it's been pretty interesting day in the markets. I mean, it's a mixed bag with the Dow hitting a record, tech sell-off deepening, though. To get us through the bell and more, I want to bring in our guest here. Right now, we have Sylvia Jablonski, Defiance ETF's co-founder and CIO, and Katie Stockton, founder and managing partner of Fairlead Strategies. Adam and I are going to be talking with them. But right now, I want to bring in Jared Blikre to get us to that closing bell. Jared.

JARED BLIKRE: All right, still looking at a mixed market and a bifurcated one at that. So let's take a look at the YFi Interactive. We got the Dow up more than 1%. It had been up about 600 points or so out of the high. It's still good for 360, though. We'll take it. S&P 500 now further in red territory right now, you can see dipping into the red within the final hour of trading here and at session lows right now.

And then finally, the NASDAQ, biggest loser laggard of the day, that is down over 2%. It is also at session lows here. Now let's take a look inside the market here. We're going to take a look at the NASDAQ 100, where we can see losses in some of the mega caps accelerating as well. Apple and Alphabet each off more than 4%. Facebook now down 3%, and Tesla, Tesla down more than 5%. And you see a lot of dark red on our screen. A lot of these names are concentrated in the semiconductor industries and the software. Not going to spend a lot of time on these heat maps here, but just want to show you the general market picture.

And then heading into the close here, we got the utilities. That is now the biggest gainer on the day. That's up 1 and 1/2%, materials right there with it. And then financials, industrials, real estate staples, energy discretionary, and even healthcare outperforming, although healthcare is in the red, along with communication services and tech. But really standing out here is that XLK loss of over 2%.

Now we've been talking about some of the heavily shorted names here. Just a quick look at GameStop. That stock is now up 40% first day of the trading week. Here is your closing bell.

[BELL]

ADAM SHAPIRO: All right, we have finished the first day, the first trading session of the week of March 8th. And here's where we stand. The S&P 500 most likely will settle down about half a percentage, off about 20 points. Dow is going to be up-- excuse me-- up about 1%, more than 300 points. The NASDAQ has fallen again. It's down about 2.4%. Lost about 310 points. I want to let you know, too, some of the sectors that were really big today. We saw energy up about a quarter percent, but it was financials, financials up 1 and 1/2%, materials up about 1.4%, and utilities up about 1.4%.

We're going to break all of this down and what it means for your investments with our guests. And let's start with you, Katie Stockton. I want to continue the discussion from the last hour, about the big sell-off in tech. If we're going to have a bit of a contraction in tech, the gains have been great. So if you're taking some profit right now, what should you do with it? Do you want to go to the small caps? Is there a specific sector there you would advise people to look at

KATIE STOCKTON: Well, I think it's OK to be on the sidelines in technology and really otherwise in US equities with the pullback that's underway. And we've seen a distinct loss of short term momentum that's actually even carried over to our intermediate term gauges as of last week. And that suggests that we'll see more corrective price action. For the S&P 500, there's initial support around 35.88, which, of course, creates some downside risk here in the near term.

And then if you look at the long-term setup, the overbought condition has been so persistent that we're at the point where we could start to see consolidation that lasts for more than a few weeks, really, a few months, potentially, as the steep slope of those uptrends regulate themselves. The loss of momentum and relative strength behind technology is very real. It's also been associated with rotation out of growth more broadly into value. And that's very much meaningful on the charts.

Now in the near term, however, we could see a little bit of a switchback towards growth, just given how stretched they've gotten on the downside in some cases. But I think that would be temporary and that we can expect them to be a continued source of generally downside leadership.

JEN ROGERS: So Sylvia, if they turn out to have this downside leadership, there are a lot of people that wanted to buy these stocks in January, February, and thought they were too expensive. Is there an opportunity here in names like Alphabet or Apple, Amazon, where we're looking at stocks that are 15% off their all-time highs?

SYLVIA JABLONSKI: Exactly, and Andy covered it in the last segment, too. You know, if you have some-- I think it's, as Kate said, perfectly reasonable to look at cyclicals and look at some of the sectors that have experienced the economic burden, basically services, restaurants, travel, things like that. I mean, they're sort of poised to grow as we reopen.

But I think that tech is on sale right now. Not all tech, but if you look at a company like Apple, for example, or Amazon, I mean a 50-bit move in the 10-year to me doesn't warrant an 18% pullback in a stock like Apple. They're all about innovation disruption technology. And I think that Apple is actually on sale now.

And if you do have some cash on the sidelines and want to get in at lower valuations and certainly lower prices, could there be volatility, could there be additional price depreciation? There could be. But I do think that it would be a reasonable trade, but it's something that you probably have to hold onto for a couple of months until you see it play out again.

ADAM SHAPIRO: Sylvia, it's great to see you. I look forward to when we can harass you in studio. But I want to follow up. If now is the time to consider looking at tech, shouldn't we broaden our horizon, though, from the big names? I mean, aren't you over Alphabet and Apple? Shouldn't we be looking at, like, 5G and some of the tech that's going to bring, you know, services as a service to the cloud? Shouldn't we be looking that way?

SYLVIA JABLONSKI: Yeah, and that's a great point. So I never discount the FAANGs because I do think, again, that there's room to grow for those names. But absolutely, I like to think about the next generation of sector investing. You know, the old school communications in 5 to 10 years is going to be the fully 5G communications types of products. So, you know, and I think semiconductors and software and some of the names that feed into those spaces are incredibly interesting.

Anything that has to do with machine learning, quantum computing, AI, again, the 5G revolution is poised to rally. And I think that those names will be, essentially the FAANG names, a decade from now and now is really the time to get into a lot of those types of plays, whether it's through ETF products or through the single stocks, look at the names that really contribute to 5G quantum computing.

And I also like SPACs. I mean, SPACs are brutally beaten up right now, but the top high quality SPACs out there in the market are really representing emerging technologies. And investors have access to that through various SPACs individually and various SPAC funds. Now's a good time to look at things like that, too. Think about the future, think about where the hockey puck is going.

JEN ROGERS: Katie, are there any key support levels that we can look at? In particular, in the growth versus value ratios that are constructive to the conversation that we're having right now about this rotation.

KATIE STOCKTON: Well, we can definitely spend a lot of time looking for levels, but it's really not the level that helps us trigger reentry from a technical perspective. What we want to see is an oversold condition, and that is measurable using certain technical indicators, and then a little uptick in momentum to suggest that there has been some support discovery, meaning there is demand for that security at that price. We can make a judgment using these support levels of what downside risk may be.

And I would argue that the emerging technology stocks that have done so very well over the past few months and exhibited upside leadership, they have broken out. They are in well-established uptrends. But when you look at their relative performance, they certainly look stretched still, versus the major indices like the S&P 500 index, such that when you look at support levels there, they're still pretty uncomfortably far below current levels. In some cases, 15% to 20% below, even with the pullbacks that we've seen.

Now we don't expect that kind of downside from the broader market. But in certain cases, with these high beta stocks that have been run up in that little last ditch effort in early February, I think they're probably better to revisit once we have that support discovery underway.

JEN ROGERS: Katie Stockton founder, and managing partner of Fairlead Strategies, and Sylvia Jablonski, Defiance ETF's co-founder and CIO, fantastic to see both of you. And now, no market day is complete without a final thought from Jared Blikre. Jared.

JARED BLIKRE: Oh, thank you, Jen. Great to have you here, by the way. Let's take a look at the US dollar index because we are seeing the US dollar broadly stronger. And this is putting some pressure on a lot of the risk markets. And this is going hand in hand with those higher interest rates that we're seeing. So here's the US dollar index going back two months, well off of these lows here. And if we take a longer term, it's going to be a one-year chart. You can see we have solidly broken to the upside here.

Now, it's only a small movement at first, but if we get too much farther up it's going to really put some pressure on the other risk markets here. And you look at what's happening in some of the other markets like gold futures, we can see gold is down to multi-month support, potential support here. Copper futures also off of the highs there, but not nearly in the same situation. And then finally, silver futures. We do see this broadening strength of the US dollar putting some pressure on a lot of markets.

And I just want to highlight the US dollar versus the Chinese renminbi, yuan, right here, and that is broken to the upside as well. So some trends that we've got to keep in mind here, especially as we see the FOMC and the Fed under pressure by the bond market here potentially to just think about or start thinking about a little bit of tapering. Guys.