Why does treasury yield affect tech stocks

- A + A NEW YORK (May 18): Global equity markets rallied and Treasury yields rose on Tuesday, as solid U.S. retail sales in April suggested economic growth might strengthen, as did an easing of China's lockdowns to contain the COVID-19 pandemic. U.S. retail sales rose 0.9% last month while data for March was revised higher to show sales advancing 1.4% instead of 0.7% as previously reported, the Commerce Department said. The data show U.S. consumers weathering inflationary headwinds as sales gained for the fourth consecutive month, said Jeffrey Roach, chief economist for LPL Financial. Sales are nominal, so much of the increase is from higher prices, he said. "We expect a rebound in economic growth in Q2," Roach said in an email, if prices moderate enough to relieve some of the pressure on consumers. U.S. and European stocks rallied following gains overnight in Asia. MSCI's gauge of stocks across the globe closed up 2.0%. The pan-European STOXX 600 index rose … [Read more...] about Shares rebound, Treasury yields rise on stronger data

U.S. equity markets are dropping to begin the new week, led lower by shares of Facebook parent Meta Platforms Inc. ( FB ) and other tech stocks. Key Takeaways Tech stocks, led by Facebook parent Meta Platforms, Google parent Alphabet, and Apple, declined, pushing markets lower. Spirit Airlines rose after it agreed to be bought for $6.6 billion by Frontier, creating the fifth largest U.S. carrier. Bond yields advanced past 1.9% and crude oil slipped after last week's gains. Meta shares are 5% lower, adding to steep losses that erased more than a quarter of the company's market value after the company last week said that it had lost daily active users for the first time. Apple Inc. ( AAPL ), Microsoft Corp. ( MSFT ) and Google parent Alphabet Inc. ( GOOG ) all fell. Hasbro ( HAS ) shares are falling on its earnings report. Shares of Verizon Communications Inc. ( VZ ) are down as the company announced it would now only offer three-year phone contracts. … [Read more...] about Tech Stocks Drop, Sending Markets Lower, as Meta Shares Fall Further

Semiconductor stocks have had an interesting two days. On Thursday, seemingly the entire industry moved higher in anticipation of a strong earnings announcement from Intel Corporation ( INTC ) after the closing bell. Unfortunately, that did not happen. Intel missed revenue estimates by $360 million and GAAP earnings estimates by $0.04 per share – coming in at $18.66 billion and $1.12 per share, respectively. As a result of the miss, Intel shares plunged lower in trading on Friday, dropping 5.47% to close at $47.04. Interestingly, the rest of the industry kept right on climbing higher. Micron Technology, Inc. ( MU ) jumped 6.48%, Advanced Micro Devices, Inc. ( AMD ) rose 5.18%, Xilinx, Inc. ( XLNX ) bounced 4.06% and Qorvo, Inc. ( QRVO ) climbed 3.76%. These bullish moves indicate that traders are confident enough in the sustained strength of the global economy and the potential of a softening in trade talks between the United States and China to shrug off the … [Read more...] about Shutdown News and FOMC Speculation Lift Stocks

Major Moves I've been talking a lot about the 10-year Treasury yield (TNX) during the past few weeks because it has been experiencing a rather dramatic decline, falling to levels not seen since December 2017. One of the reasons I reference the TNX so frequently is it is tied to a variety of assets, indexes and indicators in the financial markets, including the 30-year fixed-rate mortgage . The 30-year fixed-rate mortgage is the most popular mortgage among individual home buyers. According to Freddie Mac, approximately 90% of home buyers choose a 30-year mortgage when financing their homes. So what's the connection between the TNX and the rate on a 30-year mortgage? These two rates have a positive correlation. When the TNX moves higher, the 30-year mortgage rate tends to move higher. Conversely, when the TNX moves lower, the 30-year mortgage rate tends to move lower. In fact, these two rates move so consistently together that mortgage brokers will often approximate what the … [Read more...] about Will Falling Interest Rates Boost or Spook the Stock Market?

Share to Twitter Share to Linkedin Every market selloff presents opportunities. The iShares Emerging Markets ETF EEM is down -17% year-to-date. Even though Emerging Markets are notoriously volatile, this region is attractive due to its outsized growth potential. According to Lazard Asset Management , Emerging Market (EM) economies are responsible for about 60% of global growth, yet only represent about 13% of the MSCI All Country World Index ACWI . This gap won’t disappear overnight, but it bodes well for EM’s long-term investment prospects. EM has faster economic growth due to relatively attractive demographics and ongoing urbanization. If you’re a long-term investor, adding emerging markets exposure may also prove timely. Below is a chart of the MSCI Emerging Markets Index compared to the S&P 500 Index, expressed as a ratio. When the line is rising, it means Emerging Markets are outperforming US stocks. When the line is falling, it … [Read more...] about 3 Emerging Markets Stocks That Are Secular Winners On Sale

Major Moves The majority of the stocks in the S&P 500 lost ground today as traders attempted to quantify and make adjustments for the uncertain risk they face with the Trump administration's tariff deadline looming at 12:01 a.m. Friday morning. The risk is uncertain because nobody knows if the Trump administration is going to go through with tariff increase. The U.S. Trade Representative's (USTR) office filed paperwork on Wednesday to raise tariffs on $200 billion of Chinese goods from 10% to 25%, but that doesn't mean the administration has to pull the trigger. However, the S&P 500 component that lost the most ground today didn't drop because of uncertain tariff risks. It fell because it faces easily quantifiable risks – 38 billion of them to be precise. Until today, Occidental Petroleum Corporation ( OXY ) had been in a bidding war with Chevron Corporation ( CVX ) for Anadarko Petroleum Corporation ( APC ). Chevron originally bid $33 billion for Anadarko, … [Read more...] about Occidental Petroleum Stock Plunges, but S&P 500 Rallies Into Close

Share to Twitter Share to Linkedin Although companies are experiencing growth now, the signs are clear that a US recession is coming and likely will be upon us within a year. The Fed is starting to take measures to reduce liquidity and raise interest rates. Typically, recessions cause companies to pivot from their growth agendas into cost-saving agendas – including layoffs of staff. But layoffs would be a mistaken approach to a recession this time around. This blog shares my advice for handling the labor situation in the recession we now face. The Talent Shortage Duration Some people believe a recession would cool off the hot labor markets companies now must navigate because of the talent shortage (especially in IT and engineering skills) and the high attrition rates from the “ Great Resignation ” following the COVID-19 pandemic. Some even believe the current talent shortage is short term and situational; they believe companies just need to get … [Read more...] about Hiring Advice In Light Of Potential Recession

Share to Twitter Share to Linkedin Nearly every company is increasing its investment in technology and attempting to create new competitive advantage by assembling technology into platforms that transform how they serve their customers, service their employees, and coordinate their supply chains. Platforms automate existing activities and functions, fundamentally changing how leaders run an organization. Platforms cut across traditional organizational boundaries, incorporating many departmental functions, thus forcing a restructuring of process, organization, and technology. That creates a real challenge for organizations. Platforms automate existing activities and functions. Companies use their platforms broadly to both compete and run the organization. Digital platforms emerged when companies recognized they could dramatically improve customer or user experience by increasing the level of automation to achieve desired end-to-end process results. … [Read more...] about Engineering Challenges For Technology Platforms

Major Moves The 10-year Treasury yield (TNX) dropped to a new 52-week low today as traders moved more money out of riskier stocks and into the safety of Treasuries . This isn't a new trend for the TNX, but based on the previous pullbacks in the index, I'm starting to wonder if we may be nearing a bounce up off the downtrending support level that has been interacting with the TNX during the 2019 calendar year. The last time the TNX dropped down like this, it rallied at support in late-March, just like it did the time before in early January. Perhaps 2.25% could be the next rally point. Long-term Treasury yields can have a dramatic impact on the health of the U.S. economy. When they rise too high, they can limit growth because they make it too expensive to borrow money. Conversely, when they fall too low, they can encourage growth because they make it incredibly cheap to borrow money. If we can avoid further negative economic shocks from the trade war between the United … [Read more...] about Can Lower Interest Rates Save the S&P 500?

Major Moves Those of you who were trading through the Financial Crisis of 2008 and the subsequent rebound on Wall Street will remember an interesting period where every day felt like an opposite day. Whenever bad economic news would come out, stocks would jump higher. Conversely, whenever good economic news would come out, stocks would slump lower. On the surface, this market action seemed crazy. Why would traders push stocks higher on bad new? However, when you dug a little deeper, everything made sense. Traders were hoping the Federal Open Market Committee (FOMC) was going to boost its economic stimulus program with quantitative easing (QE), and they knew the FOMC was more likely to inject money into the economy if the economy was doing poorly. So traders were translating every bit of bad economic news as one more reason the FOMC would ultimately have to take action. I think we're seeing the same thing happening again. I've been talking all week about the growing belief … [Read more...] about Bad Economic News Is Good Again