U.S Stocks Hover Around New Highs: Tech Leads
10:05 pm Thursday, October 21st, 2021
After a record-breaking stock rally, analysts are starting to caution investors about a bumpy ride in the coming weeks because of stretched valuations and the impact of input cost inflation on earnings.
The growth stocks have flipped yesterday’s script and are now outperforming the value stocks, even as the 10-yr yield creeps higher by three basis points to 1.67%.
Tesla (TSLA) lifted the S&P 500 consumer discretionary sector (+1.2%) to a 1% gain following its earnings report. The utilities sector (+0.1%) is the only other sector in the green, while the energy (-1.8%), materials (-0.9%), and financials (-0.7%) sectors underperform in negative territory.
The underperformance of the Dow is largely due to an 8% decline in IBM (IBM), which missed revenue estimates on flat year-over-year growth. Dow Inc. (DOW) is another laggard, further pressuring the materials sector. Earnings reactions, in general, have been mixed.
The market is emanating consolidation vibes with the growth/value rotation and the sluggish price action. As a reminder, the S&P 500 is riding a six-session winning streak and gained 4.3% over that period. It flirted with its all-time high (4545.85) earlier today before returning into negative territory.
Back to the Treasury market, selling interest has been supported by an encouraging weekly jobless claims report, which has fed into growth expectations and Fed tapering expectations. The Fed-sensitive 2-yr yield is currently up four basis points to 0.42%. The U.S. Dollar Index is up 0.1% to 93.67.
Weekly initial claims decreased by 6,000 to 290,000 (consensus 303,000), which was the lowest level of new claims since the start of the pandemic.
