Stocks Mostly End Higher: Tech Leads
4:09 pm Monday, June 28th, 2021
Stocks were mixed on Monday, with the S&P 500 and Nasdaq ticking up to notch fresh record levels, with traders looking ahead to more key economic data later this week.
The trading theme today was growth over value, as the market takes note of reports of the Delta coronavirus variant spreading overseas and the accompanying restrictions reinforced by some countries to curb infections. Growth concerns are hurting the value/cyclical stocks and have fueled a seven-basis-point decline in the 10-yr yield (1.47%).
Accordingly, the energy (-2.9%), financials (-1.1%), and industrials (-0.7%) sectors are the weakest links, further pressured by some curve-flattening activity in the Treasury market, lower oil prices ($73.07/bbl, -0.97, -1.3%) and news that Boeing (BA) may not get FAA certification for its 777X until mid-2023.
Conversely, the information technology (+1.1%) and utilities (+0.6%) sectors were the only sectors trading higher and were keying off the lower interest rates and a defensive mindset. Apple (AAPL), Microsoft (MSFT), Tesla (TSLA), and NVIDIA (NVDA) were up noticeably.
Given the massive market capitalizations of these stocks, and the top-weighted position of the information technology sector, it makes sense to see the losses of the cyclical stocks obfuscated by the flat reading of the S&P 500.
The action today has been textbook-like when given negative-sounding macro news and a generally positive view on the stock market among analysts. Instead of indiscriminately taking profits, there is a strategic flow of money into stocks with secular growth potential.
U.S. Treasuries had a good start to the week — a really good start. The 10-yr note yield for its part recouped everything it lost on Friday and then some. Securities across the curve were bid, aided presumably by some short-covering activity and reported concerns about growth that were linked to the Delta Covid variant, and restrictions by foreign countries to contain its spread, as well as a slowdown in the pace of industrial profit growth in China in May.
