On Monday, a swathe of major stock indices in the Wall St. had rounded off the session in a mixed tenure with trade-sensitive Dow reporting modest gains, however, a draconian drag on mega-cap tech stocks had taken a greater-than-anticipated toll on Nasdaq, as investors’ turned their tails on so-called growth stocks and rotated towards value and cyclicals, illustrating a familiar Wall Street portrait with investors fluctuating their focus on defensives during grave uncertainties.
In point of fact, latest downfall in benchmark S&P 500 alongside Nasdaq were almost entirely galvanized by a rotation off market participants’ interests towards the stocks which would likely to be benefitted by the most during a post-pandemic recovery, eventually helping small-cap Russell 2000 alongside Dow to gobble up lofty gains.
Since last week’s September US Fed policy meet statement, a raft of market participants had reportedly moved to cyclicals and defensives, as US Federal Reserve policymakers had hinted the prospects of a tapering of fiscal support for the economy as early as by November this year.
Besides, nine out of eighteen policymakers had forecasted a rate-hike as early as by mid-2022, much earlier than a prior forecast of end-2023, prompting investors to swap growth stocks’ positions with small cap, financials and industrials.
Apart from that, seven out of eleven S&P 500 sub-indices rose on Monday with energy stocks outperforming following a maverick high-tide in crude oil and natgas futures’ prices, while financials rose 2.2 per cent as US 10-year Treasury bond Yields had briefly breached a critical psychological resistance of 1.5 per cent and small-cap Russell 2000 advanced 1.7 per cent.
Wall St. end mixed as investors move to value stocks
Citing statistics, in the day’s Wall St. wind-down, Dow closed out the session 0.21 per cent higher to 34,869.37 and benchmark S&P 500 shed 0.28 per cent to 4,443.11, mostly heaved down by growth stocks, while tech-heavy Nasdaq lost 0.52 per cent to 14,969.97.
Meanwhile, addressing to a latest downturn in growth stocks, a chief investment strategist and senior portfolio manager at SlateStone Wealth LLC in New York, Robert Pavlik said, “Interest in the cyclicals will continue to be at the forefront of investors' minds as interest rates trend higher. This is the sort of go-to trade right now”.