|
|
By Alex
Eule | Tuesday, January 4 Growth
Crunch, 2022 Edition. It's just a couple
of days into a new year, but the market has already had two of the most
2021-type days possible. The year began with a broad-market surge, with the S&P
500 and Dow
Jones Industrial Average notching new records. The tech-heavy Nasdaq
Composite outperformed. A day later, however, we have the mirror
image. As Treasury yields rose today, tech companies and other
high-growth stocks sunk. The new year has done nothing to change the inverse
relationship of yields and tech stocks -- largely because math is math. The
10-year Treasury yield closed at 1.67%, and it's now up 17 basis points,
or 0.17 percentage point, in the last two days. That's a huge move as far as
interest rates go -- and not one that sits well with high-growth
stocks. As yields rise, the value of future earnings are worth less. Internet names, cloud stocks, and
stay-at-home plays were hit hard on the day, including Shopify (-10.4%), Qualtrics (-9.1%), Snowflake (-5.0%), and Peloton
Interactive (-3.9%). The Nasdaq had its worst day
since Dec. 16, falling 1.3%. “There is a total meltdown in growth tech,”
Mizuho analyst Jordan Klein told my
colleague Eric Savitz. Legacy tech names, on the other hand, which
trade more on present earnings, did just fine. Xerox (+4.3%), Hewlett
Packard Enterprise (+4.2%), HP
Inc. (+3.1%), and IBM (+1.5%) were all in solidly positive
territory on the day. Sure enough, the old-school Dow Jones
Industrial Average, which still counts IBM as a member, rose 215 points,
or 0.6%, to a new all-time high. In two days of 2022 trading, the Dow
has already closed at two records. Energy was the best performing sector on the
day, with the price of crude rising 1.2%, to just under $77 a barrel. The Organization
of the Petroleum Exporting Countries, or OPEC, said it
would continue to increase oil production, often a negative for prices,
but the move suggested Omicron wouldn't have as big an effect on oil demand
as previous waves of Covid. Energy stocks jumped 3.5% on the day. 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. |
|
|
DJIA: +0.59% to
36,799.65 The Hot Stock: Ford
Motor +11.7% Best Sector: Energy +3.5% |
No comments:
Post a Comment