Stocks End Mixed, Tech Continues to Underperform

2:43 pm Tuesday, December 27th, 2022

The stock market trades in mixed fashion as the Santa Claus rally period (last five trading days of the year plus the first two trading sessions of the new year) continues. The Dow Jones Industrial Average sits in positive territory while the Nasdaq Composite and S&P 500 sport losses, feeling the weight of lagging mega cap stocks.

The Vanguard Mega Cap Growth ETF (MGK) is down 0.8% versus a 0.2% loss in the S&P 500. Tesla (TSLA) continues to suffer losses today, falling on reports — which a company spokesman has denied — that production has been suspended at the company’s Shanghai plant. The fact that TSLA is still struggling despite the denial underscores that investors have other worries on their minds like increased competition, weakening demand, and Elon Musk’s Twitter distraction.

Aside from Tesla, losses in Alphabet (GOOG), Apple (AAPL), and Amazon.com (AMZN) have been influential drags on the broader market with Apple hitting a new 52-week low.

Their losses, however, are seemingly turning into gains for other stocks as investors rotate money out of these names that have been hit hard this year. To that end, the Invesco S&P 500 Equal Weight ETF (RSP) is up 0.2%.

Value stocks are a specific pocket of strength today compared to growth stocks. The Russell 3000 Growth Index is down 0.6% versus a 0.2% gain in the Russell 3000 Value Index.

Roughly half of the 11 S&P 500 sectors trade in positive territory, led by energy (+1.0%) which is bolstered by rising oil prices. The industrials sector (+0.5%) is another top performer despite a decent loss in Southwest (LUV) after the airline canceled thousands of flights due to the winter storm.

Meanwhile, the consumer discretionary (-0.9%), communication services (-0.8%), and information technology (-0.7%) sectors have fallen to the bottom of the pack, weighed down by their respective mega cap components.

Chinese stocks and names with high exposure to the Chinese market are among the best performers today on reports that China, starting January 8, will end quarantine requirements for international travelers. Wynn Resorts (WYNN) and Alibaba (BABA) are winning standouts for the group.

Treasury yields are moving higher today. The 2-yr note yield is up 12 basis points to 4.43% and the 10-yr note yield is up 10 basis points to 3.84%.