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By Matthew
Klein | Friday, September 11 Material
World. Since the pandemic began,
the stock market has rewarded companies that make it easier to avoid leaving
the house, such as Zoom Video
Communications (up almost 6x
year-to-date), Peloton (up about 3x
since the beginning of the year), and Amazon
(up 90% in 2020 before last week’s selloff).
The hardest-hit companies have been in energy extraction, travel, and
entertainment. Somewhere in
the middle are the industrial and materials companies that define the
physical world we actually live in. Many are trading below where they were at
the start of the year, but today, for whatever reason, many of their shares
rose. That propped up the overall market during a session when the major tech
companies continued to lose value. The result was that the S&P
500 index gained just 0.05% on Friday even
though a respectable 316 of the index's components were in
positive territory. The biggest
winners today include Huntington
Ingalls Industries, which makes warships and
submarines for the U.S. Navy, Howmet
Aerospace, which makes engines and
other parts for civilian and military planes, LyondellBasell
Industries, which makes chemicals
and plastics, CF Industries, which
makes fertilizer, Mohawk
Industries, which makes flooring
materials, and Avery
Dennison, which produces packaging
materials. With the exception of Avery Dennison, which has done relatively
well, all of those companies are down 25% to 50% this year. But today,
they were all up 3% to 7%. By contrast,
the tech-heavy Nasdaq
Composite index was down 0.6%, with the biggest components
off several percentage points. Since the peak last Wednesday, the Nasdaq is
down 10%, with many of its biggest components, such as Apple and Tesla,
down significantly more. The Russell
2000 small-cap
index, which has been at a perpetual disadvantage throughout this crisis, was
down 0.7% today, which shows this wasn’t just a tech phenomenon. Stock
markets in the rest of the world were generally up slightly, while U.S.
interest rates, oil, precious metals, and the dollar were basically flat. But the
correction in tech shouldn’t distract from the bursting of the lumber bubble.
For some reason, futures prices for blocks of wood—possibly the lowest-tech
financial asset available—had gained 125% from the start of the year until
the peak at the beginning of September. Since then, those contracts have lost
half their value. But despite those losses, lumber prices are still up more
than 50% year-to-date, which represents more than 30 percentage points of
outperformance compared to the Nasdaq. Watch our TV
show on Fox Business Friday at 10 p.m. or 11:30 p.m. ET; Saturday at 10
a.m. or 11:30 a.m.; or Sunday at 7 a.m., 10 a.m., or 11:30 a.m. This week,
see an interview with Vir
Biotechnology CEO George
Scangos on the development of an antibody treatment
for Covid-19. |
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DJIA: +0.48% to 27,665.64 The Hot
Stock: Huntington Ingalls
Industries +6.9% Best Sector:
Industrials +1.4% |
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