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By Alex Eule
| Thursday, June 17 Tech
Still Rises. Investors have had two
trading sessions to digest the Federal
Reserve's plans for the economy
and its (slight) openness to raising rates. The textbook response would
have been to send value stocks higher, while selling off more expensive
growth stocks. Sure enough, the opposite has happened. For a second
straight day, the Nasdaq
Composite outperformed. The tech-heavy index was up
0.9% today, closing within spitting distance of an all-time high. Meanwhile,
the broad-based S&P 500 was essentially flat. The Dow
Jones Industrial Average, more of a proxy for
value stocks, fell 210 points, or 0.6%, its fourth consecutive decline. While the
Fed is finally in its talking-about-thinking-about
rate-increases mode, investors aren't really buying it. The 10-year
Treasury yield slid today, down six basis points, or six hundredths
of a percentage point, to 1.509%. The 10-year
yield is now down a quarter of a percentage point since its high of 1.749% on
March 31. As yields have fallen, tech stocks have resumed their
outperformance. The Nasdaq has returned 6.9% since March 31, while the
S&P 500 is up 6.3% and the Dow is up 3.2%. There was
one more predictable casualty of the Fed's talk. Gold fell 4.6% today, to
$1,773.80 an ounce. It was the precious metal's worst day since
November. My colleague
Barbara Kollmeyer covered the fall here.
She quotes Ipek
Ozkardeskaya, a senior analyst at
Swissquote: Higher
yields increase the opportunity cost of holding the
non-interest-bearing gold, and prospects of a further rise in yields
should cap the upside potential in the yellow metal despite the rising
inflationary pressures. Gold miners
and other commodity producers fell as well today, including Newmont (-7%),
Freeport McMoRan (-5.2%), and Nucor (-4.7%). |
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DJIA:
-0.62% to 33,823.45 The Hot
Stock: Enphase Energy +6.6% Best Sector:
Technology +1.2% |
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