* Eli Lily drops after ‘mixed’ data from mid-stage trial
* Southwest, JetBlue signal recovery in leisure bookings
* Indexes: Dow up 0.1%, S&P flat, Nasdaq dips 0.1% (Updates to market open)
March 15 (Reuters) – The S&P 500 paused on Monday below an all-time high as investors awaited cues from the Federal Reserve’s meeting this week amid caution over rising borrowing costs spurred by massive fiscal stimulus. Delta Air Lines, Southwest Airlines and JetBlue Airways said leisure bookings are rising and offered some of the first concrete signs that the worst may be over for the airline industry. The S&P 1500 airlines index jumped about 3.8% to a one-year high, while planemaker Boeing Co added about 2%. Other travel-related stocks including Carnival Corp, Wynn Resorts and MGM Resorts gained between 3% and 5%. Wall Street’s main indexes on Friday logged their best week in six as approval of a $1.9 trillion relief package and mass vaccinations fueled demand for economy-linked stocks such as banks, energy, materials at the cost of high-growth tech names. The major U.S. stock indexes were roiled in recent weeks as a spike in longer-dated U.S. bond yields due to fears of an increase in inflation and, in response, a tapering of the Fed’s easy monetary policy worried investors. “The U.S. economy looks in a better shape than most other developed economies,” said Hussein Sayed, chief market strategist at FXTM. “Despite the rosier economic outlook, this week’s Fed meeting is expected to be absent of major policy changes.” At the end of Fed’s two-day meeting on Wednesday, policymakers are expected to forecast that the U.S. economy will grow in 2021 at the fastest rate in decades while reiterating their dovish stance for the foreseeable future. The yields on benchmark 10-year Treasuries hovered near their 13-month high at 1.61%, slightly lower than its peak of 1.64% hit on Friday. At 9:47 a.m. ET, the Dow Jones Industrial Average rose 87.51 points, or 0.27%, to 32,866.15, the S&P 500 gained 0.29 points, or 0.01%, to 3,943.63 and the Nasdaq Composite lost 6.81 points, or 0.05%, to 13,313.11. Five of the major S&P sectors were lower, with financials and energy leading losses. Tesla Inc added “Technoking of Tesla” to billionaire Chief Executive Elon Musk’s list of official titles in a formal regulatory filing that also named finance chief Zachary Kirkhorn “Master of Coin”. Tesla’s shares were nearly flat. Eli Lilly and Co shares slumped about 8.5% after “mixed” results from the drugmaker’s mid-stage trial testing its experimental drug to treat Alzheimer’s cast a doubt on the chances for the drug’s accelerated approval, according to analysts. Advancing issues outnumbered decliners by a 1.2-to-1 ratio on the NYSE and a 1-to-1 ratio on the Nasdaq. The S&P 500 posted 59 new 52-week highs and no new low, while the Nasdaq recorded 239 new highs and six new lows.
CAMBRIDGE, England (Reuters) – Regular booster vaccines against the novel coronavirus will be needed because of mutations that make it more transmissible and better able to evade human immunity, the head of Britain’s effort to sequence the virus’s genomes told Reuters. The novel coronavirus, which has killed 2.65 million people globally since it emerged in China in late 2019, mutates around once every two weeks, slower than influenza or HIV, but enough to require tweaks to vaccines. Sharon Peacock, who heads COVID-19 Genomics UK (COG-UK) which has sequenced half of all the novel coronavirus genomes so far mapped globally, said international cooperation was needed in the “cat and mouse” battle with the virus
“We have to appreciate that we were always going to have to have booster doses; immunity to coronavirus doesn’t last forever,” Peacock told Reuters at the non-profit Wellcome Sanger Institute’s 55-acre campus outside Cambridge.
“We already are tweaking the vaccines to deal with what the virus is doing in terms of evolution – so there are variants arising that have a combination of increased transmissibility and an ability to partially evade our immune response,” she said. Peacock said she was confident regular booster shots – such as for influenza – would be needed to deal with future variants but that the speed of vaccine innovation meant those shots could be developed at pace and rolled out to the population. COG-UK was set up by Peacock, a professor at Cambridge, exactly a year ago with the help of the British’s government’s chief scientific adviser, Patrick Vallance, as the virus spread across the globe to Britain. The consortium of public health and academic institutions is now the world’s deepest pool of knowledge about the virus’s genetics: At sites across Britain, it has sequenced 346,713 genomes of the virus out of a global effort of around 709,000 genomes. On the intellectual frontline at the Wellcome Sanger Institute, hundreds of scientists – many with PhDs, many working on a voluntary basis and some listening to heavy metal or electronic beats – work seven days a week to map and then search the virus’s growing family tree for patterns of concern. Wellcome Sanger Institute has sequenced over half of the UK total sequenced genomes of the virus after processing 19 million samples from PCR tests in a year. COG-UK is sequencing around 30,000 genomes per week – more than the UK used to do in a year.
Three main coronavirus variants – which were first identified in Britain (known as B.1.1.7), Brazil (known as P1)and South Africa (known as B.1.351) – are under particular scrutiny.
Peacock said she was most worried about B.1.351. “It is more transmissible, but it also has a change in a gene mutation, which we refer to as E484K, which is associated with reduced immunity – so our immunity is reduced against that virus,” Peacock said. With 120 million cases of COVID-19 around the world, it is getting hard to keep track of all the alphabet soup of variants, so Peacock’s teams are thinking in terms of “constellations of mutations.” “So a constellation of mutations would be like a leaderboard if you like – which mutations in the genome that we’re particularly concerned about, the E484K is must be one of the top of the leaderboard,” she said. “So we’re developing our thinking around that leaderboard to think, regardless of the background and lineage, about what mutations or constellation of mutations are going to be important biologically and different combinations that may have slightly different biological effects.” Peacock, though, warned of humility in the face of a virus that has brought so much death and economic destruction. “One of the things that the virus has taught me is that I can be wrong quite regularly – I have to be quite humble in the face of a virus that we know very little about still,” she said. “There may be a variant out there that we haven’t even discovered yet.” There will, though, be future pandemics. “I think its inevitable that we will have another virus emerge that is of concern. What I hope is that having learned what we have in this global pandemic, that we will be better prepared to detect it and contain it.” Nick Note: Get the Pfizer vaccines… you can ease up a bit… But do not take stupid chances like getting drunk at the tittie bar. How about we stick with our vaccinated kids and grand kids and not take unnecessary changes. Kids can come back to the house. If everyone is vaccinated … ugly mask off. Look none of us are spring chickens. I am sure we went overboard…. SO. I have lost many people who went underboard…….. Its my sworn mission in life to make you wealthier and healthier. We survived the corona virus….SO FAR!. And i will use my tools to keep track of the mutations which will surely come. Look I am not sure of our internet connection in heaven… So your just going to have to stay with me here….. AND we are in what may be our greatest trade ever…. THe Black Jack trade…. we get them when the count is high and we get them when the count is low….. How cool is that!
Treasury Secretary Janet Yellen said Sunday that the US could see full employment next year.
The stimulus package will offer the support for that recovery, Yellen told ABC News on Sunday.
Full employment does not mean zero unemployment, but it would reflect a healthier economy.
The US could return to full employment in 2022, Treasury Secretary Janet Yellen said on Sunday, renewing her forecast now that the Biden administration’s coronavirus pandemic relief package has been signed into law. “I am hopeful that if we defeat the pandemic, that we can have the economy back near full employment next year,” Yellen said in an interview with “This Week” on ABC News. Yellen said last month that the US economy could see such a recovery, but that it would hinge on whether President Joe Biden’s bill – which includes direct payments for individuals, an expansion of the child tax credit, and funding for vaccine distribution and testing – was adopted. The bill passed the Senate earlier this month in a 50-49 vote, and the House last week in a 220-211 vote. It marked the administration’s first major win, and comes as millions of Americans are struggling as the coronavirus pandemic has devastated parts of the economy in the past year. The Trump administration passed relief packages last year, offering direct payments to taxpayers among other aid to individuals. “I believe there is enough support in this package to relieve suffering and to get the economy quickly back on track,” Yellen, the former head of the Federal Reserve who was confirmed in January as Treasury Secretary, said Sunday. “Full employment” does not mean a state of zero unemployment, but such conditions would reflect a US economy that is far healthier than where it is today as the unemployment rate remains at levels elevated compared to previous years. The Bureau of Labor Statistics said earlier this month in the latest jobs report that the US unemployment rate fell to 6.2% from 6.3%. Still, that figure does not capture the breadth of how many people are out of work. The U-6 unemployment rate, which the government defines as workers who are marginally attached to the labor force and others who are employed part-time, was 11.1% in February, the BLS said. Some on Wall Street are optimistic about what the relief package means for the economic recovery. Goldman Sachs economists told clients earlier this month that the US employment rate could drop to 4.1% by year-end thanks to a combination of the stimulus package and coronavirus vaccines rolling out. “Despite the surprising speed of recovery early on, we are still very far from a strong labor market whose benefits are broadly shared,” Federal Reserve Chair Jerome Powell said last month. Nick Note: The market is still not pricing in the explosive growth about to hit the stock market
European countries – including Denmark, Norway, Austria, Italy and Iceland – have suspended use of the Oxford-AstraZeneca jab after reports of blood clots in vaccinated people. The European Medicines Agency is now launching an investigation but at present there is no firm evidence to suggest the two are linked and incidents of clotting have not been reported in the UK. Denmark, Norway and Iceland have suspended the rollout of the vaccine, while Italy and Austria have stopped using a certain batch as a precaution. The Danish Health and Medicines Authority said the rollout out of the jab would be paused for at least 14 days while investigations are carried out. They did not say how many reports of blood clots there had been. “It is currently not possible to conclude whether there is a link. We are acting early, it needs to be thoroughly investigated,” Danish health minister Magnus Heunicke said on Twitter.
News Flash
The Irish National Immunisation Advisory Committee (NIAC) recommended on Sunday that the rollout of the COVID-19 vaccine developed by AstraZeneca and Oxford University be stopped temporarily. Ireland’s Deputy Chief Medical Officer Ronan Glynn stated that the decision was made due to reports of increased risk of blood clots in people inoculated with the jab, and backed by the findings of the Norwegian Medicines Agency. He underlined that no direct link has been found between the thrombosis risk and the vaccine administration, but added that NIAC called for “the temporary deferral of the COVID-19 vaccine AstraZeneca vaccination programme” on “the precautionary principle.” Søren Brostrøm, director of the National Board of Health, added: “It is important to emphasise that we have not opted out of the AstraZeneca vaccine, but that we are putting it on hold. Nick Note: From the start i warned about the DNA monkey vaccine fron Astra. You should ONLY get the Pfizer mRNA vaccine… And you need to GET IT NOW! After all Pfizer did bring you the no dick millennials Viagra…..
CAPE CANAVERAL, Fla. — A SpaceX Falcon 9 rocket lit up the predawn sky early this morning (March 11) as it carried a new batch of 60 Starlink internet satellites into orbit, before nailing its landing on a floating platform at sea. The two-stage Falcon 9 booster lifted off from Space Launch Complex 40 here at Cape Canaveral Space Force Station at 3:13 a.m. EST (0813 GMT). About 8.5 minutes later, the rocket’s reusable first stage returned to Earth for its sixth landing, touching down on one of SpaceX’s drone ships. The floating platform, called “Just Read the Instructions,” was stationed out in the Atlantic Ocean, about 400 miles (630 kilometers) downrange. It was a clear night in Florida for the mission’s second attempt. The launch was originally planned to occur on Tuesday night (March 9) but was pushed back so SpaceX could conduct more prelaunch checkouts. Weather forecasters at the U.S. Space Force’s 45th Weather Squadron predicted a 90% chance of favorable conditions for launch this morning, and Mother Nature delivered.
This latest liftoff marked SpaceX’s seventh mission of 2021 and the company’s 21st 60-satellite Starlink launch overall. It starred one of the better known Falcon 9 first stages in the fleet
Emblazoned with a now-sooty NASA worm logo, B1058 is the booster that delivered two NASA astronauts to the International Space Station (ISS) in May of last year, returning orbital human spaceflight to U.S. soil with SpaceX’s Demo-2 mission. The veteran launcher also delivered a cargo Dragon spacecraft to the ISS, a communications satellite for South Korea’s military and the most satellites ever launched on a single mission (Transporter-1). Today, B1058 carried its second stack of Starlink satellites. The predawn spectacle marked the 110th overall flight of a Falcon 9 rocket and the 56th reflight of a Falcon 9 first stage. It was the sixth mission for this particular booster, and SpaceX set a new record for fastest turnaround time for a rocket with this many flights under its belt. B1058 last flew on Jan. 24, and it blasted off again from the same launch pad this morning, just 45 days later; the previous record for such a veteran booster was 59 days. SpaceX relies heavily on its fleet of veteran rockets, which have enabled the company to keep up with its launch ambitions. However, SpaceX has always stressed that, while booster recovery is beneficial, the main goal of each mission is to successfully deliver the payload to space. The company recovered a first stage for the first time in 2015, when a Falcon 9 booster touched down on terra firma at one of the company’s Florida landing pads. Ever since, SpaceX has been striving to better understand the recovery process and how much wear and tear each launch puts on the rocket. With each recovery attempt, the company has been able to refine its process and reduce times between flights. SpaceX founder and CEO Elon Musk has said that his long-term vision involves rockets that resemble airplanes, in the sense that they lift off, land, refuel and lift off again in short order. Musk has said, for example, that a goal of SpaceX is to launch, land, and then launch and land the same rocket again within 24 hours — a milestone that has not yet been reached. While SpaceX makes landing rockets look easy, a recent anomaly shows that it’s not always a slam dunk. On Feb. 15, the company broke a 24-booster recovery streak when a Falcon 9 first stage, designated B1059, failed to land on a drone ship in the Atlantic Ocean after launching a different batch of Starlink satellites into orbit. The mishap was attributed to “heat damage,” with company officials elaborating on that during a recent teleconference. Benji Reed, SpaceX’s senior director for human spaceflight, said that one of the booster’s protective engine covers failed, allowing hot gases from the engine to leak into places it wasn’t supposed to, causing an engine to shut down during flight. This shutdown ultimately caused the rocket to miss its mark on the drone ship. With this morning’s successful liftoff, SpaceX has now launched more than 1,200 Starlink satellites into orbit, including some that are no longer operational. The company has planned for its initial Starlink constellation to be 1,440 strong but has sought approval for tens of thousands more. There are many more launches coming as SpaceX fills out this growing megaconstellation. The company launched its Starlink program with one major goal: to connect the globe. To that end, SpaceX designed a fleet of flat-paneled broadband satellites that fly over Earth, providing internet coverage to users around the world. SpaceX recently started taking preorders for its public rollout. Potential users could sign up for the service via a website, pay a deposit and then be notified when coverage is offered in their area. The rollout is on a first-come, first-serve basis while the company is conducting an extensive international and domestic beta-testing phase. In advance of this launch, SpaceX rolled out service to Germany and New Zealand and is working to expand its existing service in the United Kingdom. But that’s not all. Recent filings indicate that the company is seeking permission to expand its services to moving vehicles, including planes, boats and RVs. According to Musk, the current Starlink user terminals, which facilitate access to the satellites overhead, are too large to put in cars, so for now, it’s targeting bigger vehicles. Nick Note: This starlink.com is the satellite system you need to switch to. It will be faster then your broadband and their is no comparison to existing satellite systems(really low latency) because the starlink satelits are much closer to earth. I “obtianed” a test system. And it is unfuckingbelivable. I am outside the present footpring so i only get covereage a hour or two a day. You need to go to their web sight and sign up right now. Roll out will be late next year. But each launch increases coverage. Cost is around $500 for the equiptment and $85 a monnth for service and their will be a TV package. Hear me… this is how internet will be delivered. I canot belive they gave him a license for thousands of low orbit satellite.. He caught the big boys sleeping…Sign up today…..starlink.com…… This is the future.
(Bloomberg) — The recent rise in interest rates triggered a bout of volatility, but it’s not making the pros in the stock market run for the hills just yet. Some of the world’s biggest fund managers say equities can persevere and continue rallying through the rise in government bond yields. They are focusing instead on prospects for a powerful economic and profit recovery.
In an informal Bloomberg News survey of more than 50 market players, most respondents including State Street Global Advisors and JPMorgan Asset Management said they’re monitoring the pace of the ascent in yields — and the reasons for it — rather than awaiting a particular level that will mark a breaking point for stocks. As long as central banks stick to accommodative policies, the equity bull run can power ahead, these investors say.
“Absent a shift in central banks’ thinking, we don’t think yields will rise to a level where it broadly hurts equities,”said Hugh Gimber, a London-based global market strategist at JPMorgan Asset Management. “Provided the Fed sticks to guidance, and remains comfortable, willing to look through any temporary spike in inflation, I don’t see an environment where yields are rising in a way that’s problematic for equities broadly.” The surge in government bond yields over the past month helped fuel an exit from the frothier parts of the market such as technology and defensive shares, leading to a dip of as much 11% in the Nasdaq 100. But the vaccination push in major economies and bets on a recovery in economic growth as well as consumer spending are filling equity bulls with confidence that they can keep reaping returns despite higher interest rates. At the same time, the pick-up in yields and the more than 70% rally in stocks from pandemic lows are pushing fund managers to become more selective. The likes of Manulife Investment Management and HSBC Asset Management say that, while this isn’t the time to exit equities, the selloff in bonds will accelerate the rotation out of the more expensive growth parts of the market and into cheaper and laggard equities that can benefit from the economic recovery. “If rates were rising from a normal range, tech stocks would’ve been fine, but not true when the valuations are what they have been,” said Dave King, a Boston-based portfolio manager at Columbia Threadneedle Investments. “Potential reopening, coinciding with the rise in yields as well as other factors, were positive for the stocks that people didn’t like too much last year, whether it’s banks or energy.” The energy sector is the best performer in the MSCI World this year, rising about 30%, while financials are next with a 14% gain. More defensive and rates-dependent sectors, such as consumer staples and utilities, are both in the red. Cult stocks that have been investors’ favorites throughout the pandemic have also had a harsh few weeks. Tesla Inc. was down as much as 36% from its January peak before recouping some of its losses last week. Even market stalwart Apple Inc., the biggest U.S. stock, crashed as much as 19% from its record high. This environment could also mark a shift from U.S. stocks to other international equities, such as Europe and emerging markets, that have higher exposure to value sectors. Having lagged the S&P 500 during last year’s rally from the March lows, the Stoxx Europe 600 is outpacing the American benchmark so far in 2021. “The risk of an equity market correction driven by higher yields is highest in the U.S.,” said Joost van Leenders, an Amsterdam-based senior investment strategist at Kempen Capital Management. “The U.S. economy has recovered faster than the European economy, and another major fiscal stimulus bill has just been approved. Inflationary pressure in Europe looks minimal. From a style perspective, growth is more at risk than value. This also means Europe may benefit relative to the U.S.”
Investors who are watching out for a particular Treasury yield level that can significantly hurt global equities pointed to a range between 2% and 3% for 10-year bonds.
“It’s important to remember that historically, rising yields have been consistent with rising markets, because both are driven by growth, and we think that will remain the case this time,” said Mark Haefele, chief investment officer at UBS Global Wealth Management. At the same time, he added that “yields above 2.25-2.5%, if not accompanied by an improvement in the long-term earnings growth outlook and lower risk premia, would start to make current equity valuations look more challenged.”
The pause in the bond market selloff in the middle of the week last week showed how quickly stocks and growth sectors can come rushing back. The Nasdaq 100 on Tuesday surged 4% for its biggest jump since November, signaling that appetite for tech names remains strong.
“If the rise in bond yields is too quick or too high, it’s a negative for equity valuations. However, if controlled and modest over time, equities can absorb the adjustment reasonably well,” said Nathan Thooft, Boston-based global head of asset allocation at Manulife Investment Management. “Especially if the reason for higher rates is better growth rather than just higher inflation.” Nick Note: Economic growth and corporate profit are about to explode. And P/E ratios are about to plunge driving the value investor to join the fun with the momentum traders going all in………. I see in the short run (90 days) the biggest stock market rally ever… Then Katie and Angie needs to help bar the door……..
Rising interest rates have sparked a surge in stock-market volatility that’s seen tech shares take a sharp dive.
But investors should not fear rising interest rates, according to a recent client note from The Leuthold Group.
“Yields may be rising, but yield pressure is still extremely low because real growth is improving even faster,” said Jim Paulsen, the firm’s chief investment strategist.
A spike in interest rates since the start of the year has accelerated a rotation out of high-growth technology stocks and into value stocks poised to benefit from a reopening of the economy. The Nasdaq has fallen more than 10% over the past month as the Dow has soared to record highs, with a spike in the 10-year US Treasury yield acting as the main catalyst. It recently surged to a cycle high of more than 1.60% after starting the year below 1%. But according to Jim Paulsen, the Leuthold Group’s chief investment strategist, rising interest rates do not represent a long-term threat to the stock market. Paulsen expects the 10-year yield to cross 2% by the end of the year. A spike in interest rates and its impact on the stock market depends on the economic backdrop, according to Paulsen. Rising interest rates amid a strengthening economy “may prove no challenge at all for stocks,” Paulsen said. Nick Note: Its very simple hedge funds slammed the NASDAQ to try and cash out the millennials. The grave and costly mistake they are making is not taking into account the success of the vaccine, ending the economic crises. And they failed to realize the coming impact on the market of 2 trillion in happy checks that will provide record buying in stocks. The spin is that reflation is inflation. This is a old proven false hood. Rapid economic growth does not lead to inflation. AND with the Fed Funds rate under 1% and trading at 0.8% to be precise their is no interest rate threat to the stock market. Conclusion: All this rate increases killing just the NASDAQ is desperate spin by hedge funds who as a result of last Thursdays reversal are more desperate then ever.
Since 1950, the S&P 500 achieved an average annualized price return of 9% during quarter when interest rates were on the rise, according to the note. “The effect of rising-yield quarters is probably not that much worse because real economic growth also improved for many of these quarters,” Paulsen explained.
With COVID-19 subsiding and the full reopening of the economy imminent, economists are expecting 2021 GDP growth to surge to 5.5%. This represents a favorable backdrop for the stock market even if interest rates continue their ascent.
If the pace of economic growth slows in 2022, the stock market will become much more sensitive to rising interest rates.
But for now, “with the economy enjoying a post-pandemic boom, rising yields may prove far less damaging for stock investors in 2021,” Paulsen concluded.
OSLO (Reuters) – Three health workers in Norway who recently received the AstraZeneca vaccine against COVID-19 are being treated in hospital for bleeding, blood clots and a low count of blood platelets, Norwegian health authorities said on Saturday. Norway halted on Thursday the rollout of that vaccine, following a similar move by Denmark. Iceland later followed suit. “We do not know if the cases are linked to the vaccine,” Sigurd Hortemo, a senior doctor at the Norwegian Medicines Agency told a news conference held jointly with the Norwegian Institute of Public Health. All three individuals were under the age of 50.The European medicine regulator EMA would investigate the three incidents, Hortemo added. “They have very unusual symptoms: bleeding, blood clots and a low count of blood platelets,” Steinar Madsen, Medical Director at the Norwegian Medicines Agency told broadcaster NRK. “They are quite sick…We take this very seriously,” he said, adding authorities had received notification of the cases on Saturday. AstraZeneca was not immediately available for comment. Before Denmark’s and Norway’s move, Austria stopped using a batch of AstraZeneca shots while investigating a death from coagulation disorders and an illness from a pulmonary embolism. Still, EMA on Thursday said the vaccine’s benefits outweighed its risks and could continue to be administered. Europe is struggling to speed up a vaccine rollout after delivery delays from Pfizer and AstraZeneca, even as a spike in cases amid a more contagious virus variant has triggered fresh lockdowns in countries like Italy and France.
Rising yields, cheaper stocks pose threats to tech sector
Nasdaq unable to maintain its gains relative to S&P 500
Tech Stocks Set for `Bumpy Ride,’ Saxo Bank Says
A rebound in the Nasdaq 100 that recouped as much as half of its $1.5 trillion losses from its February high hasn’t been enough to deter skeptics. In fact, analysts are warning that the index may yet face more battering. Their concern emanates from the bond market, where rising yields have put pressure on richly valued stocks such as the tech companies that populate the Nasdaq gauge. An increase of 50 basis point in 10-year Treasury yields could lead to a bear market for the index, or a decline of as much as 20%, according to a study from Ned Davis Research. And as the economy heals, investors are embracing sectors such as energy that will likely benefit. One way of seeing the impact of that rotation out of tech is to plot the Nasdaq’s relative altitude versus the S&P 500, a gap that after briefly exceeding its level from 2000 has recently narrowed. To DoubleLine Capital LP founder Jeffrey Gundlach, it’s a sign that another collapse may be in store. While single-day rallies — 4% on Tuesday and 2.4% on Thursday — lifted the Nasdaq 100 to its first gain in four weeks, they’re not calming nerves. After all, big up days are not uncommon during a downtrend. In 2000, when the market started a three-year crash, the index had 27 sessions where it rose at least 4%. That compared with six such days in 1999, when prices doubled. “The early stages of a bear market is typically punctuated by ferocious rallies, and what matters in the end is how far the rallies extend and not how quickly they move within a single session,” said Michael Shaoul, chief executive officer at Marketfield Asset Management LLC. “Evidence continues to mount that the technology sector has finally relinquished its position as key global leadership.” The Nasdaq 100 is poised to trail the S&P 500 for a second month in a row. In a week when the tech-heavy gauge fell into a 10% correction, other indexes tracking everything from small-caps to banks, transports to industrials, climbed to records. On Wednesday, a version of the S&P 500 that strips out market cap bias — treating Apple Inc. the same as News Corp. — hit an all-time high even as the Nasdaq 100 was roughly 8% below its February record, a divergence not seen in two decades. That’s raising alarms for anyone who lived through the dot-com crash. Back then, when the Nasdaq 100 started falling in March 2000, the equal-weighted S&P 500 kept marching forward and didn’t peak until 14 months later — a sign that money was being shifted away from the tech behemoths that soared in the internet bubble. Ultimately, the Nasdaq 100 lost half of its value. “People should not take solace in the fact that almost everything else besides the tech group is acting well,” said Matt Maley, chief market strategist at Miller Tabak + Co. “If the tech group continues to underperform, it’s going to weigh on the rest of the stock market eventually.” .To be sure, as expensive as they may look now, software and internet stocks don’t match the extremes seen 20 years ago. And thanks to innovations like cloud computing and automation, their earnings are expanding, as opposed to contracting or nonexistent, as they were in 2000. But the strengthening economy, buttressed by vaccines and government support, alongside rising bond yields could mean trouble for the market’s biggest secto
While some strategists have brushed aside the yield risk, saying tech stocks have shown a fickle relationship with Treasuries over time,Joe Kalish, chief global macro strategist at Ned Davis Research, found that since 2014, the Nasdaq 100’s forward earnings yield — the inverse of its price-earnings ratio where the higher it is, the cheaper stocks are — has moved almost in lockstep with forecast corporate bond rates. In his model, if 10-year Treasury yields rise to 2% this year, that in turn could drive long-term Baa-rated bond rates to 4.5%, a scenario where the Nasdaq 100 would have to drop as much as 20% to stay attractive, all else equal. If yields climbed but the Nasdaq didn’t move, this would indicate over-valuation, Kalish said, adding his model correctly flashed warnings in 1987 and 2000. Based on the price-earnings ratio, the Nasdaq 100 isn’t cheap relative to other stocks, even after the latest pullback. With a multiple of 28, its premium over the S&P 500 stood roughly 7% above its five-year average. Moreover, the growth advantage that has sustained tech’s outperformance in all but one year since 2009 is poised to disappear — at least for the next two years — as pandemic-beaten firms like airlines and automakers roar back. Profits from software and internet companies are expected to expand 22% this year and 12% in 2022. Both lag behind the broad S&P 500, where earnings are forecast to increase 24% and 15%, respectively, data compiled by Bloomberg Intelligence show.
Of course, with the latest federal relief package approved, cash may again flood into equities, preventing losses from snowballing.Yet with Nasdaq 100 knocking on the door of its relative peak, it’d be a mistake not to consider the downside risk, according to Jim Paulsen, chief investment strategist at Leuthold Group. “New-era investments are at a significant crossroads,” he said. “After a prolonged period of extensive out performance by the Nasdaq and tech stocks, it is not unreasonable to foresee a phase of under performance, consolidation or even an outright collapse.” Nick Note: Now that you read the bullshit let me tell you the facts. The day after the NASDAQ put in its record highs on February 18th the Hedge Fund manipulators pounded the stocks of the NASDAQ with 8 trading days of massive selling. Their cover story is the yield on the 10 year bond that was on record lows would rise……. Really? we are talking a 50 bases point rise half a percent will cars the NASDAQ///// talk about STUPID!!! so let me see if i can explain their Ned Davis bullshit research spin. The justification for their manipulation is the yield in the 10 year bond has risen by 50 bases points this year. And maybe their is another 50 bases point rise in the next year. SO! do you really think NASDAQ high tech investors are swayed by the yield on 10 year…….. Bullshit. Do you think the millennial investor sees the sleepy bond market as a alternative investment. Our whole trade rational NOW rests on 2 things….. The economic recovery and the millennials looking for a BIG score… and a 1% increase in the 10 year bond is not what they are hunting for. I doubt they even know how to by a bond or calculate the real yield….what ever that shit is. I am betting on happy check rich millennials boosted by the BIG economic recover will bet big time on high tech stocks. And i predict we will give the hedge funds and Ned another ass kicking! I thought you should know who your enemies are…… Its the same ones in every trade………
Reuters) – The S&P 500 slipped on Friday after hitting an all-time high in the prior session, as a spike in U.S. bond yields revived inflation worries and dented appetite for high-growth stocks. The tech-heavy Nasdaq tumbled 1.1% after rebounding more than 6% over the past three sessions, while the blue-chip Dow, on the other hand, was closing in on its fifth consecutive record high. Wall Street’s main indexes are set for their best week in six after one of the largest U.S. fiscal stimulus bills was signed into law and data reinforced views that the economy was on the path to a recovery. A consistent rise in U.S. bond yields has raised fears of a sudden tapering of monetary stimulus, pressuring the main U.S. stock indexes in recent weeks. The yield on the benchmark 10-year notes rose back above 1.60% on Friday to approach the one-year highs touched last week. “The risks of inflation picking up have increased significantly due to a jump in money supply through stimulus and the anticipated demand that we might see as the economy slowly unlocks,” said Jonathan Bell, chief investment officer at Stanhope Capital in London. Speedy vaccine distribution and more fiscal aid have also added to concerns of higher inflation despite assurances from the Federal Reserve to maintain an accommodative policy. All eyes will now be on the central bank’s policy meeting next week for further cues on inflation. U.S. consumer sentiment improved more than expected in March, hitting its highest level in a year, a survey by the University of Michigan showed on Friday. At 10:10 a.m. ET, the Dow Jones Industrial Average rose 155.74 points, or 0.48%, to 32,641.33, the S&P 500 lost 8.83 points, or 0.22 %, to 3,930.51 and the Nasdaq Composite lost 146.37 points, or 1.09 %, to 13,252.31. The Nasdaq has been particularly hit by the sell-off in recent weeks and confirmed a correction at the start of the week as investors swapped richly valued technology stocks with those of energy, mining and industrials companies that are poised to benefit more from an economic rebound. The yield-sensitive group of Facebook Inc Apple Inc, Amazon.com Inc, Netflix Inc, Google-parent Alphabet Inc, Tesla Inc and Microsoft Corp were down between 1% and 3%. Tech, communication services and consumer discretionary indexes, which house these mega-cap stocks, slipped the most among major S&P sectors. Banks jumped about 2%, while financials, industrials clinched new record levels. Ulta Beauty Inc slumped about 11% after the cosmetics retailer forecast annual revenue below estimates, as demand for make-up products were under pressure due to extended work-from-home policies. The company also named President Dave Kimbell as its new chief executive officer. U.S.-listed shares of China-based JD.com Inc dropped nearly 6% after three sources said it is in talks to buy part or all of a stake in brokerage Sinolink Securities worth at least $1.5 billion. Declining issues matched advancers on the NYSE by a 1.5-to-1 ratio on the Nasdaq. The S&P 500 posted 54 new 52-week highs and no new low, while the Nasdaq recorded 347 new highs and 10 new lows. Nick Note: This is beyond stupid. rates are where they were a year ago. Their is no inflation their will be no inflation and short rates where business financies at WILL NOT GO UP. The Fed who is the creature of short rates will not allow it… Let me show you how stupid this is… The thinking is NASDAQ stocks will be hit hard by higher rates that will not come and have not come… OK so the reason why the DOW is higher? They want you to believe DOW stocks don not go to the market to finance. Its down right stupid. If you accept higher interest rates are coming,y are not on the short end. then if you are so fool as to belive those higher rates will crimp profits.. which is beyond studied… You then have to believe it will Affect NASDAQ listed companies more the DOW or S&P500 companies…. what bullshit!!