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By Connor
Smith | Monday, January 10 Never Say
Die Nasdaq. U.S. equities recovered
from intraday lows today. Tech stocks, buffeted by rising bond yields, stood
out in the bounce back. The Nasdaq
Composite was down as much as 2.7%, but closed up
nearly 0.05%. The last time the tech-heavy index fell that far only to close
higher on the day was Feb. 28, 2020, when the index dropped 3.5% but ended
the day up 0.01%. While the S&P 500 index and Dow
Jones Industrial Average rallied from intraday lows, both still
closed down on the day. With not much else going on in markets,
rising bond yields continued to weigh on tech stock sentiment. The 10-year
Treasury yield rose for its sixth-consecutive trading
day. It rose 0.010 percentage point, to 1.779%. Rising bond yields have weighed on
high-growth tech stocks in recent sessions because higher yields
make future profits less valuable in current terms. Barron's Jack
Denton and Jacob
Sonenshine write
that tech stocks recovered after the 10-year yield fell back from
1.8%. “There are also some signs
that rates are getting a bit extended as well with the 10-year yield pulling
back after testing Friday’s high 1.8%,” wrote Michael Reining, senior market
strategist at New York Stock Exchange. Higher short-term rates
could also slow down economic growth, and that’s not helping more
economically sensitive sectors. The two-year Treasury note’s yield is up to
0.9% from a Friday close of 0.87%. That shows that markets are convinced that
the Fed will lift its short-term benchmark lending rate—currently at 0%—more
than once. On Wednesday, inflation
data will hit the wires, with economists expecting a 7.2% year-over-year rise
in the consumer-price index, according to FactSet. Markets will be looking
for cues as to when inflation will have peaked. The hotter inflation is, the
more likely the Fed is to move quickly in removing monetary support from the
economy and markets. It's not just tech stocks. Meme stocks GameStop and AMC
Entertainment Holdings, as well as
joke cryptos like Dogecoin and Shiba
Inu have dropped in recent sessions—a
possible signal that Wall Street traders are betting tightening monetary
policy will pour cold water on, "you only live
once" investments. I write about it here. Barron's is now accepting nominations for the third
annual Barron's 100 Most Influential Women in U.S. Finance.
The deadline for submissions is Jan. 15, 2022. Apply here. |
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DJIA: -0.45% to 36,068.87 The Hot Stock: Moderna +9.3% Best Sector: Healthcare +1.0%
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