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By Alex Eule
| Monday, September 27 Yielding
to Value. Value stocks are
rising and tech stocks are slumping. We've seen this movie before -- and,
once again, it's thanks to rising bond yields. In the wake of last
week's Fed meeting, investors are refocused on rising rates. The yield
on the 10-year Treasury note was up for the fifth consecutive day today,
settling at 1.482%. The yield is up 17 basis points over that
stretch, its largest five day move since March. Back then,
you might remember, tech stocks saw a sudden selloff, with the tech-heavy Nasdaq
Composite down as much as 10%
in early March. We're not there yet, but again tech stocks are feeling the
brunt of rising rates. Today, the Nasdaq Composite was down 0.5%, even as the
more value-focused Dow Jones
Industrial Average rose 71 points, or 0.2%. The
broad-based S&P 500 split the difference. It was off 0.3% on the
day. Energy
stocks soared on the day, with prices of crude oil continuing their ascent.
Crude was up 2%, its fifth consecutive gain, to $75.45 a barrel, a new 52-week
high. Oil is now up 111% since its October 2020 lows. While
investors have spent the last week focused on the Fed and monetary
policy, the rest of this week is likely to be all about fiscal policy.
Lawmakers in Washington have a lot on their plate. Tonight, Republicans
blocked a plan from House Democrats to fund the government
temporarily and put off a looming debt ceiling vote. From here, the
negotiations will be tied up in the Biden administration's $3.5 trillion
spending bill, as well as its trillion-dollar infrastructure plan, both of
which face key votes later this week. While the
shutdown headlines could get grim, investors, it's worth noting, haven't been
all that bothered by past
shutdowns. A default -- forced by hitting the debt ceiling --
might be a different story. For now,
investors are betting both issues still get worked out. "Expect
authorization to keep the government operating, at least temporarily, as
neither party wants to get blamed for a shutdown. The same is true ultimately
for the debt ceiling extension, despite the political brinksmanship," David
Joy, chief market strategist at Ameriprise,
wrote today. |
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DJIA: +0.21% to 34,869.37 The Hot Stock: Cabot
Oil & Gas +8.5% Best Sector:
Energy +3.6% |
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