Stocks Fall as Yields Rise
4:09 pm Friday, August 19th, 2022
U.S. stocks fell on Friday in a broad selloff led by megacaps as U.S. bond yields rose, with the S&P 500 posting losses for the week after four straight weeks of gains.
There was some hot inflation data out of Germany this morning that reawakened inflation concerns and some sobering price action in the meme stocks, particularly in Bed Bath & Beyond (BBBY). Higher long-term rates have also acted as a headwind.
Bed Bath & Beyond is bringing down meme stock peers following news that Ryan Cohen’s RC Ventures completed the sale of its BBBY stake and a Bloomberg Law report that the company has hired a law firm to help address its debt load.
The general risk-off trade has the growth stocks and mega caps underperforming the broader market. The Vanguard Mega Cap Growth ETF (MGK) is down 1.7% versus a 1.2% loss in the Invesco S&P 500 Equal Weight ETF (RSP) and a 1.0% loss in the S&P 500. The Russell 3000 Growth Index (-1.6%) is trailing the Russell 3000 Value Index (-1.1%).
Semiconductors are also trailing the broader market thanks to Applied Materials’ (AMAT 105.07, -3.22, -3.0%) cautious-minded commentary accompanying its earnings report. The PHLX Semiconductor Index is down 2.4%.
Market breadth shows a strong bias towards selling with decliners leading advancers by a 6-to-1 margin at the NYSE and a 4-to-1 margin at the Nasdaq.
S&P 500 sector performance reflects a risk-off mentality. The defensive-oriented health care (+0.7%), utilities (+0.4%), and consumer staples (+0.1%) sectors outpace the broader market.
The inflation report from Germany has registered in the Treasury market. The 2-yr note yield is up three basis points to 3.25% while the 10-yr note yield flirts with the 3.00% mark at 2.98%.
There was no U.S. economic data of note today.
