Stocks were mixed on Wednesday but did not change much. The market rallied strongly and many stocks took a breather.
Dow Jones Industrial Average
rose 16.02 points, or 0.05%, to close at 33,446.26 after spending most of the day in the red. AT
added 6.01 points, or 0.15%, to 4079.95, while
fell by 9.54 points, or 0.07%, to 13,688.84 points. The largest gains in the S&P 500 were
(ticker: LB), the parent company of Victoria’s Secret, which gained 3.7% after its analyst rating upgrade.
Meanwhile, ultra-high-growth stocks have been hit.
Shares (TSLA) are still bearish after hitting a record in January; The electric car giant dropped 3% on Wednesday. Video conferencing giant shares
Zoom Video Communications
(ZM), having fallen more than 40% from its record high in October, fell another 2%. Higher long-term interest rates are taking their toll on these stocks, as firms expect most of their profits in the long run and their current valuations are vulnerable to higher rates.
However, the more mature growth companies performed well.
(GOOGL) rose 1.3%, 2.3% and 1.3%, respectively. AT
the index, which includes stocks of companies with large capitalization, rose 0.28%.
Stocks have a lot of good news as fiscal stimulus and new business start-ups propel the economy forward. Over the past 30 days, including Wednesday’s numbers, the Dow and S&P 500 are up 5% and more than 6%, respectively. Stock prices are high and interest rates have risen, making stocks less attractive than bonds. And the rally has lifted many sectors, which means that stocks have some downward trend; According to Canaccord Genuity, 86% of S&P 500 stocks traded above their 50-day moving averages on Tuesday. The weakness on Wednesday was almost as widespread as the market rally; According to FactSet, 61% of S&P 500 stocks fell.
And all this happens in the absence of any significant events or changes in the economic outlook. Trillions of dollars in fiscal stimulus are already in circulation. President Joe Biden’s over $ 2 trillion infrastructure plan does not contain many pleasant surprises. The Federal Reserve gave commentary on Tuesday afternoon, but said nothing new. The reporting season for the first quarter has yet to begin, although investors will be focusing on financials and forecasts when companies start reporting.
As for the Fed, stocks have not even responded to the mostly positive central bank news, suggesting they are far from cheap. The Fed has not hinted at a rate hike anytime soon. “There appears to be no latent interest in higher rates, suggesting that rates will indeed remain low until unemployment drops to pre-pandemic levels,” wrote Brad McMillan, chief investment officer of the Commonwealth Financial Network, in comments by e-mail for the press. Even against this background, stocks could not gain significant momentum during the day.
“Investors may have their own views on what the next catalyst for stocks will be as the market has largely stabilized this week – which is not bad since we are at record highs,” – Mike Loewengart, managing director of investment strategy at E * Trading. wrote in an email.
Write to Jacob Sonenshine, [email protected]