Wednesday, September 28, 2022

Dow Flops, Growth Pops

By Nicholas Jasinski  |  Tuesday, September 27

Fading. It was a nice morning on Wall Street: The sun was out, bond yields had pulled back, and the stock market was up. The Dow Jones Industrial Average had added 1.4% at its highs around 10 a.m., when the S&P 500 was up 1.7%.

That didn't last long, however. By lunchtime, yields—among the stock market's chief nemeses this year—were on the climb again. The 2-year U.S. Treasury note yield held at about 4.3% today, while the 10-year yield ticked up to 3.96%, a 12-year high. The U.S. dollar moved back into the green on the day, reversing its morning decline.

The Dow and S&P 500 closed off 0.4% and 0.2%, respectively, each at their lowest levels since November 2020. Both indexes are on six-day losing streaks and down more than 6% in that span.

“The bond market continues to spook the stock market,” wrote Louis Navellier, founder of Navellier & Associates.

Under the surface, however, there were signs of increased optimism by investors.

The Nasdaq Composite broke a five-day losing streak to tick up 0.2% today. And among S&P 500 sectors, the biggest losers on the day were the classic defensive groups: consumer staples, utilities, and real estate. Investors tend to flock to those groups when they're fearful, and trade out when they see greater risk-adjusted returns elsewhere.

Meanwhile, the energy, technology, and consumer discretionary sectors rose. It was a good day for growth stocks, including many of the market's most beaten-up shares of 2022. Tesla gained 2.5%, while PayPal Holdings and Salesforce.com each rose close to 2%.

One day does not a trend make, nor is it clear that a rebound here would be anything more than a bear market rally. But nothing goes down forever, and growth stocks were certainly due for a bounce.

 

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DJIA: -0.43% to 29,134.99
S&P 500: 
-0.21% to 3,647.29
Nasdaq: 
+0.25% to 10,829.50

The Hot Stock: CF Industries +6.1%
The Biggest Loser: Digital Realty Trust 
-4%  

Best Sector: Energy +1.1%
Worst Sector: Consumer Staples 
-1.7%

A one-day chart of the major indexes.

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