Tech surge puts Nasdaq on record course

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The New York Stock Exchange is pictured in the Manhattan neighborhood of New York City, New York, USA on April 16, 2021. REUTERS / Carlo Allegri

  • All eyes on the Fed minutes at 2 p.m. ET
  • Didi falls when China fines it for illegal merger deals
  • Futures: Nasdaq up 0.57%, Dow flat, S&P up 0.13%

July 7 (Reuters) – The Nasdaq should hit a new high on Wednesday as falling government bond yields fueled tech-heavy growth stocks as investors focused on the Federal Reserve’s minutes of the June meeting for the development of policy support to estimate go forward.

The return on 10-year US notes slipped to a new 4-1 / 2-month low for the seventh year in a row, while mega-cap tech Facebook Inc (FB.O) Apple Inc (AAPL.O), Alphabet Inc (Googl.O) and Amazon.com Inc (AMZN.O) gained between 0.5% and 0.8% in pre-market trading.

Fast-growing technology stocks are sensitive to returns as their value depends heavily on future earnings, which are more heavily discounted as bond yields rise.

On the other hand, interest rate sensitive bank stocks like Citigroup (CN), Goldman Sachs (GS.N), JP Morgan Chase & Co (JPM.N), Wells Fargo (WFC.N) and Bank of America (BAC.N) fell which contributed to the heavy losses in the previous session.

Minutes of the Fed’s most recent monetary policy meeting, due at 2 p.m. ET, are meant to provide clues as to how the US Federal Reserve may begin to cut its extensive bond-buying program amid signs of an accelerating economic recovery. Continue reading

“Everyone will be investigating (minutes) to see when this throttling might begin, especially after the restrictive tone of the meeting itself,” said Chad Oviatt, director of investment management at Huntington Private Bank in Columbus, Ohio.

Wall Street was concerned about the soaring inflation as investors switched between economy-linked value stocks (.IVX) and growth stocks (.IGX) in recent sessions.

The S&P 500 growth index is now up 16.3% while its counterpart is up 14.8%, outperforming it after more than five months of underperformance.

The Dow (.DJI) and S&P 500 (.SPX) fell on Tuesday, with financials and other groups closely linked to economic growth spearheading declines while the Nasdaq (.IXIC) posted a second consecutive closing record.

“We will continue to see this surge between growth and value as markets try to determine whether we have achieved top growth or top policy,” said Oviatt.

“What we would suggest is that we will see further reopening efforts and this still provides a good backdrop for these value names.”

At 8:32 p.m. ET, Dow e-minis were down 8 points or 0.02%, S&P 500 e-minis were up 5.75 points or 0.13%, and the Nasdaq 100 e-minis were up 83.5 points or 0.57%.

China’s market regulator said it fined a number of internet companies, including Didi Global (DIDI.N), Tencent (0700.HK), and Alibaba (9988.HK), for failing to report previous merger and acquisition deals for approval to have. Continue reading

Didi’s US-listed shares fell 3.9%, causing them to plummet nearly 20% on Tuesday.

Reporting by Devik Jain and Shreyashi Sanyal in Bengaluru; Adaptation by Arun Koyyur

Our Standards: The Thomson Reuters Trust Principles.



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