Steep losses in technology shares dragged down the S&P 500 on Monday as a continuous rise in bond yields dented the appetite for growth stocks. Meanwhile, investors piled into into economically sensitive names to bet on a comeback.
 | MON, FEB 22, 2021 | | | | DOW | | NAME | LAST | CHG | %CHG | | AAPL | 126.00 | -3.87 | -2.98% | | MSFT | 234.51 | -6.46 | -2.68% | | INTC | 60.71 | -2.30 | -3.65% | |
| | S&P 500 | | NAME | LAST | CHG | %CHG | | AAPL | 126.00 | -3.87 | -2.98% | | AAL | 20.44 | +1.76 | +9.42% | | GE | 12.50 | +0.48 | +3.99% | |
| | NASDAQ | | NAME | LAST | CHG | %CHG | | AAPL | 126.00 | -3.87 | -2.98% | | AMD | 85.37 | -4.21 | -4.70% | | TSLA | 714.50 | -66.80 | -8.55% | |
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Market indexes closed with mixed results on Monday. While all three started the day on a downward note, the Dow Jones Industrial Average picked up 27 points to end the day in the green. The S&P 500 declined by 0.77%, while the tech-heavy Nasdaq Composite slid by 2.46%. "Economic recovery" seemed to be the theme for stocks that fared well. Investors are finding ways to bet on businesses reopening amid a positive outlook for the pandemic. Companies lifting the Dow today included theme park operator the Walt Disney Co., which rose by 4.4%, and construction machinery maker Caterpillar, up 3.9%. Chemical company Dow also rose. In what may be reflecting sentiment around higher interest rates and higher oil prices, American Express climbed 3.2% and Chevron, up 2.70% also helped buoy the Dow Industrials.  On the flip side, tech stalwarts that thrived during the pandemic are losing steam. Consider how Amazon tumbled by 2.1%, while Apple slid by close to 3% on Monday. Shares of Netflix were down 1.19%. Tesla also took its lumps, slumping by 8.6% at the market close. Stocks aren't the only thing for investors to weigh in an economy gearing up for a reopening. Perhaps it'll soon be time to revisit asset allocations, including the fixed income side of the portfolio, according to research from Goldman Sachs. "So far the rise in inflation expectations has not been a headwind for 60/40 portfolios as investors mostly faded deflation risk," Goldman Sachs analysts noted. "But with inflation and inflation expectations rising further, the drag from bonds and pressures for higher equity allocations increases, also as bond yields remain close to the zero lower bound," they noted.
In other words, bond prices are starting to drop as inflation fears rise. This may pressure investors in this classic stock-bond portfolio mix to put more money into equities. So the rise in yields and drop in bonds, may end up boosting equities markets after all. |
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