Stocks Fall As Tech Stocks Underperform
2:42 pm Tuesday, November 29th, 2022
The stock market started the session on a more upbeat note, attempting to rebound from yesterday’s losses. Things deteriorated around 11:00 a.m. ET as mega cap stocks tumbled towards session lows amid more angst about Apple (AAPL) suffering potentially large iPhone 14 Pro production shortfalls this quarter.
The Vanguard Mega Cap Growth ETF (MGK) is down 0.6% versus a 0.2% gain in the Invesco S&P 500 Equal Weight ETF (RSP) and a 0.2% loss in the S&P 500.
The weakness today is in contrast to Hong Kong’s Hang Seng, which rose 5.2% on a growing hope that Chinese authorities will take steps in coming months to shift away from the extreme zero-COVID policy restrictions and pave the way for stronger growth.
That hope hasn’t registered for U.S. market participants as focus shifts to Fed Chair Powell’s speech at 1:30 p.m. ET on Wednesday at the Brookings Institution entitled Economic Outlook, Inflation, and the Labor Market. That speech will influence the market’s policy path expectations, so it is understandable that conviction is lacking in front of it.
Market participants are also anticipating more key economic data this week, including the November Employment Situation Report on Friday. Today’s data releases showed a 0.1% month-over-month increase in the September FHFA Housing Price Index (prior +0.7%), a 10.4% year-over-year increase in the S&P Case-Shiller Home Price Index (prior 13.1%), and a 100.2 reading for the November Consumer Confidence Index (prior 102.2) that also included an uptick in year-ahead inflation expectations to 7.2% from 6.9%.
Roughly half of the 11 S&P 500 sectors trade in the red. Utilities (-1.0%) and information technology (-0.9%) sit at the bottom of the pack while real estate (+1.1%) and energy (+0.8%) lead the outperformers.
The energy sector is getting a boost from rising oil prices ($77.82/bbl, +0.59, +0.8%) that have moved up on speculation OPEC+ could soon announce a cut in production and the hopeful consideration that oil demand in China will improve with some relaxed COVID restrictions.
Treasury yields are inching higher. The 10-yr note yield is up two basis points to 3.73% after reaching 3.65% overnight and the 2-yr note yield is up one basis point to 4.47% after skirting 4.40% earlier.
