Techs, NASDAQ hammered, Dow ekes out a gain in Monday market action
WASHINGTON – For those overweight in tech stocks, Monday was not a good way to open the last trading week of February. Tech stocks big and small got hammered for any number of reasons, but mostly because investors increasingly think that techs are way overpriced. That led to Monday’s cascade of selling, dealing the tech-heavy NASDAQ one of its worst days in recent memory. That widely-followed average tanked 341.41 points for a whopping loss of 2.46% on the day.
NASDAQ sent to the woodshed Monday
The S&P 500 chimed in with a miserable performance itself, losing 0.77%. But, after a lousy morning, the Dow managed to eke out a 0.9% gain Monday. That encouraged investors. A little. But it did nothing to overcome the belly flop over on the NASDAQ.
The bad news in dollars and cents
CNBC added some color to the grimly monochrome Monday action. That financial network’s market report noted additional investor fears, kindled as long-moribund interest rates begin to spike upward, offering some real yield competition to stocks.
“Steep losses in technology shares dragged down the S&P 500 on Monday as a continuous rise in bond yields dented the appetite for growth stocks. Meanwhile, investors piled into economically sensitive names to bet on a comeback.”
CNBC noted the volatile action in individual stocks, including some surprises.
“Big Tech stocks came under pressure with Apple, Amazon, Microsoft all dropping at least 2%… Disney jumped more than 4%, while industrial giant Caterpillar and chemicals company Dow Inc jumped 4.1% and 3.3%. American Express and Chevron also lifted the blue-chip Dow.”
After the NASDAQ and techs, we dealt with interest rate issues as well
High-dividend paying shares have long proved a better buy than bonds over the past year’s near-zero percent interest rates. Those bargain basement rates, a boon to home buyers and refinancers, kept bond prices high and yields on Federal paper almost nonexistent. That equation may soon disappear. CNBC explained why, quantifying the considerable effective interest rate hike in recent days.
“Some equity investors grew concerned about rapidly rising Treasury yields in recent weeks as they could especially hurt high-growth companies reliant on easy borrowing while diminishing the relative appeal of stocks.
“The 10-year Treasury yield rose again on Monday to around 1.36% after jumping 14 basis points last week to its highest level since February 2020. So far this month, the benchmark rate has moved up 27 basis points. The 30-year yield touched a one-year high of 2.2% Monday. A basis point is 0.01%.
“‘This move in yields should be something that investors keep a close eye on,’ Matt Maley, chief market strategist at Miller Tabak, said in a note. ‘Just because long-term rates are ultra-low on an historical basis, we do not believe that they will have to rise as far as most pundits think they do…before they impact the stock market.’”
Investors also worry about what the Fed might say about the US financial situation this Wednesday. Stay tuned.
Always look on the bright side of life… or not…
On the brighter side, despite the nation’s increasingly counter-productive lockdown regimes, particularly in Big Blue states like New York and California, the rest of the nation’s economy continues to pursue a fairly brisk recovery. Will it hold? Will it improve? The jury’s out on that one.
In individual stock action, Apple (NASDAQ: AAPL) and Amazon.com (NASDAQ: AMZN) took a whooping today for a variety of reasons. Apple = tech = Monday selloff, despite news the company just overtook Samsung in the smartphone sales race for the first time since 2016, according to numerous reports.
Amazon, for its part, has been stuck in a fairly tight trading range since mid-October 2020, unable to break through its late-summer 2020 high of $3,552 per share. Maybe next month… or not. It’s been yo-yo city for these shares for months, particularly after Amazon’s Fearless Leader, Jeff Bezos, announced he’d be stepping down from Amazon’s direct management, presumably to pursue his own personal space race with Elon Musk.
Real estate looking good. For sellers. But what about post-pandemic commercial space?
Real estate continues to hum along, working much better these days for sellers than for buyers. But everyone’s happy for the moment as home loans and re-fis still remain cheap and relatively easy to get. Liar loans, unfortunately, are also popping up. We’ll see how they work out this time. Our attitude: people never learn. Don’t miss the next scary episode.
It’s likely, however, that commercial builders and the banks that finance them may face a grim tomorrow when the Covid-19 restrictions and lockdowns begin, which I estimate to be around 2030 or later in Blue States.
Whatever the case, the office leasing situation may have been permanently altered by Zoom and its friends, leaving vast acreages of newly built-out office space vacant across the entire country. Could jeopardize some of those real estate loans. But, as Elmer Fudd famously said, “Be vewwy, vewwy quiet!” Or, as Evilline ordered in The Wiz, “Don’t gimme no bad news!”
More excitement tomorrow. I think.
– Headline image: Elmer Fudd, another beloved but hapless character from the vaults of Warner Bros. Looney Tunes menagerie. Lo-res reproduction, very small portion of commercial product. Fair use in text reference. Original © Warner Bros. Via Wikipedia entry on the character.