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By Alex
Eule | Monday, February 22 Legacy
Gains. The S&P
500 fell
for the fifth consecutive trading day, giving the index its longest losing
streak since Feb. 28, 2020. We all know what happened from there. That's not
to suggest we're in the midst of last year's 30% selloff -- the S&P
500 is down a rather tame 1.5% during the current losing streak. But stocks
have lost their momentum, at least for now. One culprit
is the quick rise in bond yields. The 10-year Treasury rose again today to
1.370%, its highest level since Feb. 24 of last year. Higher yields can
entice investors to rotate out of stocks, and they also make growth
stocks less attractive, since future profits mean less in today's dollars, as
interest rates rise. The rising
yields come with more optimism about the future, and there were more
signs today that Covid-19 vaccines are working as well as anyone
could have expected. New data from the U.K. shows that one shot of the Pfizer/BioNTech vaccine led to a 57% reduction of cases
among people over the age of 80. Two doses brought the protection to 88%.
Timed with that news, U.K. Prime Minister Boris
Johnson laid out a plan for
the country to emerge from its nationwide quarantine, including the
re-opening of schools and the allowance of small group gatherings next
month. Social restrictions could end in the U.K. as soon as June. In the U.S.,
the number of Covid-19 deaths has tragically
passed 500,000, but investors are firmly focused on the
re-opening. Airlines, travel names, and retailers were all among
the top-performing stocks, while stay-at-home names like Peloton
Interactive, Zoom
Video, and Chewy all saw significant losses. The tech-heavy Nasdaq
Composite fell 2.5% on the
day. The index is now off 4% from its Feb. 12 high. Energy
stocks, which rally with economic sentiment, were up 3.5%. Crude
oil itself rose 3.8%, to $61.49 a barrel; it's up 29% from its January low.
Analysts at Goldman
Sachs now expect oil to
reach $75 a barrel in the third quarter, given increased demand and lagging
supply. Avi Salzman has
more on the bullish call here,
including why traders and money managers are more bullish on oil than they've
been in a year. Investors
spent the day dumping
pricey tech names, in favor of cheaper legacy tech like Oracle, IBM, and HP
Enterprise, which all saw gains
on the day. Oracle was the subject of Barron's cover story over the weekend. In that piece,
Eric Savitz made a
compelling case for how the nearly 50-year old database company is
turning the corner with a bold new cloud effort. Its shares rose more than 5%
on the day, the kind of post-story move we like to call a "Barron's
Bounce." |
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DJIA: +0.09% to 31,521.69 The Hot
Stock: People's United
Financial +14.9% Best Sector:
Energy +3.5% |
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