All time records set again
The S&P 500 rose to an all time high of: 4358
The Nasdaq closed at an all time high of: 14664
Big tech stocks do the heavy lifting
Popular technology and internet stocks once again outperformed the market on Wednesday 7th July 2021. Investors bought growth stocks instead of the reopening sectors that were in favour last month and proved popular in the first half of the year.
Apple, Microsoft and Amazon were all up on Wednesday each reaching double digits gains over the last month.
Bond yields drop
While traders have cited several reasons for the shift back into Big Tech, most see the decline in bond yields as the main reason.
The U.S. 10 year Treasury yield rate fell to 1.3%, its lowest level since February 2021. Higher yields reduce the value of future earnings relative to current earnings.
The appetite for growth stocks tends to rise when rates fall. So, where does this now leave us with rotation back to growth stocks? Has the Fed got it right – is this period of inflationary pressure actually just transitory?
Both the Fed and Bank of England believe it is.
Deflation anyone?