Friends
Interest rates have been rising for months now, but have accelerated to the upside in the past few days. Remember, the 10 year Treasury note was as low as .50% last year, but today we saw that yield rise to nearly 1.60% at one point. Sure, 1.60% yield may not seem like much, but the speed of the move along with the size has gotten the stock market’s attention. What is causing rates to rise? Are rates rising for the right reasons, which would be robust economic growth (or at least the anticipation of such), and thus an uptick in inflation (which the Fed has been hoping to see for years). Or, are rates rising because fears of stimulus adding to our bourgeoning debt levels, whether for Covid-19 relief or infrastructure, are worrying U.S. debt holders?
Whatever the case, concerns spilled over into stocks today. By the close the Dow Jones Industrial Average was down 559 points to finish the day at 31,402. The S&P 500 was down 96 points to close at 3,829. The Nasdaq Composite Index was down 478 points to close at 13,119. Gold was down $26 to trade at $1,771 per ounce, while oil was up $.28 to trade at $63.50 per barrel WTI.
As we have pointed out, this has been a wild week of trading, as even the meme stocks got back in the game over the last couple of days. High flying tech and stay at home names, which have been the darlings of the market over the past year are falling back to earth. Industrials, energy and financials have been strong but even they were under pressure today. Before we tally up the score for the week, let’s see how things finish out tomorrow. Buckle up.
Have a nice evening everyone.
