Friends
It was another ugly day for the Nasdaq, as the high flyers of the pandemic era continue to see the air let out of the bubble. Bubble, you ask? Well, yes. When stocks begin to trade at ridiculous multiples not only to earnings but just to sales, then bubbles can form. That’s not even mentioning those companies that have no sales or earnings at all. The trigger to today’s selloff appeared to be long term rates rising once again. It seems we have entered a paradigm where when rates go up, tech stocks go down.
As for today, by the close the Dow Jones Industrial Average was down 121 points to finish the day at 31,270. The S&P 500 was down 50 points to close at 3,819. The Nasdaq Composite Index was down 361 points to close at 12,997. Gold was down $19 to trade at $1,713 per ounce, while oil was up $1.49 to trade at $61.24 per barrel WTI.
The bulls and bears have been battling it out for a few weeks now, but what is even more noticeable is the continued rotation from growth to value. This rotation had begun many weeks before, but the rise in interest rates has accelerated everything. I’d bet on a snapback in growth at some point as it will get oversold in the short run. But, growth has dominated value for years. Are things really changing or is this just a short term phenomena? Time will tell.
Have a nice evening everyone.
