* Koss doubles in value; GameStop in volatile trading
* Yields lower after 10-year Treasury note auction
* Indexes up: Dow 1.67%, S&P 0.88%, Nasdaq 0.17% (Adds House vote, comments)
March 10 (Reuters) - The S&P 500 rose on Wednesday and the blue-chip Dow hit a record high after tepid consumer prices data for February calmed inflation worries and legislators gave final approval to one of the largest economic stimulus measures in U.S. history.
A rotation into sectors such as energy and financials continued, both in small- and large-cap stocks, as investors bet on consumer spending when the U.S. economy reopens and sold the big tech names that have fueled the rally since last March.
Accelerated coronavirus vaccine rollouts and a monster fiscal stimulus on the horizon have raised bets on higher inflation, triggering a spike in Treasury yields that pushed the Nasdaq down as much as 12% from its Feb. 12 record close.
Meanwhile, Wednesday’s $38 billion 10-year Treasury note auction, which was met with modest demand, pushed the benchmark yield to a session low of 1.506%.
The “market seemed nonplussed and Treasuries rallied but that didn’t seem to give a boost to tech (stocks),” said Mark Luschini, chief investment strategist at Janney Montgomery Scott.
Rising yields had weighed on technology shares that rely on cheap funding for growth.
The U.S. Labor Department released data that indicated the core consumer prices index, which excludes volatile items such as food and energy, rose less than expected last month.
Investors are shifting funds from tech stocks with lofty valuations to other groups, such as energy and financials, that are undervalued and more of a play on an improving economy in a post-COVID world than big tech is, said Peter Tuz, president of Chase Investment Counsel in Charlottesville, Virginia.
“It is occurring in fits and starts,” Tuz said. “That is essentially the overwhelming theme in the market right now and it probably will continue until these things run their course.”
The move away from Apple Inc, Amazon.com Inc , Facebook, Tesla and Microsoft Corp , all down on the day, included a rotation into small-cap stocks, which rose 2.0%, or double the gains of the S&P 500.
Also helping lift stocks are analysts who have raised their estimates for U.S. corporate profitability this year following surprisingly strong fourth-quarter earnings and growing optimism about an economic rebound.
By 2:41 p.m. ET (1941 GMT), the Dow Jones Industrial Average rose 531.85 points, or 1.67%, to 32,364.59, the S&P 500 gained 33.96 points, or 0.88%, to 3,909.4 and the Nasdaq Composite added 22.29 points, or 0.17%, to 13,096.11.
The Nasdaq extended gains in choppy trade after logging its best one-day percentage jump in four months on Tuesday.
The sweeping $1.9 trillion COVID-19 relief bill passed by the U.S. House of Representatives gave President Joe Biden his first major victory in office.
Some of the $1,400 in payments heading to most Americans could end up in the stock market and could provide a boost for GameStop and other stocks popular among retail investors active in online social media forums.
Trading in GameStop was volatile with the stock at times poised to set the videogame retailer on track for its longest streak of daily gains in six months and extending a rally that has already doubled the company’s market value.
Among other “meme” stocks, Koss Corp climbed 49%.
Advancing issues outnumbered declining ones on the NYSE by a 2.86-to-1 ratio; on Nasdaq, a 1.67-to-1 ratio favored advancers.
The S&P 500 posted 47 new 52-week highs and no new lows; the Nasdaq Composite recorded 283 new highs and 19 new lows. (Reporting by Karen Pierog in Chicago, Herbert Lash in New York, and Medha Singh and Shashank Nayar in Bengaluru; Editing by Maju Samuel and Lisa Shumaker)