Safe technology as stock market sell-off continues

• Tech stocks saw a modest rally on Friday as long-term bond yields fell sharply.
• However, the rest of the stock market remained under pressure.
• Next week will focus on the release of key US data, fiscal stimulus headlines and more comments from Powell.

US Tech Stocks experienced a modest recovery on Friday, with the Nasdaq 100 ending the session with gains of around 0.63%. Big tech companies Apple (+ 2.55%), Amazon (+ 1.86%), Facebook (+ 3.3%), Microsoft (+ 2.64%), Alphabet (+ 1.11%) and semiconductor stocks (SOX index + 2.28%) won . Long-term US bond yields tumbled in a sharp reversal from recent moves. Still, despite Friday’s modest rally, the Nasdaq 100 still had its worst month since October 2020, falling 0.1% from the end of January and roughly 7% from February’s highs (set earlier in the week). pass).

The strength of big tech names helped prop up the S&P 500 and keep the index above the 3800 level, although the index still ended the session down 0.43%. Despite falling about 2.5% on the week, the S&P 500 Index managed to end the month 2.6% higher. The Dow, which is not that close to tech names, fell 1.5% on the session to fall below 31,000. On the week, that means that the Dow Jones fell 1.8%, which means that it maintained gains of 3.15% for the month.

Regarding the sectors, Information Technology (+ 0.6%) and Discretionary Consumption (+ 0.58%) were the best, while Energy (-2.3%) and Financial (-1.97%). The S&P 500 growth index gained 0.28%, driven by the decline in long-term bond yields, while the S&P 500 value index fell -1.28%.

Performance of the day

Market commentators attributed the US stock market sell-off (excluding Tech’s rally) to current concerns that the US economy will heat up; They cited a January base PCE that was higher than expected and a January personal income number that soared. Next week, the focus will turn to the US ISM manufacturing and services reports, as well as the latest US labor market report, for further evidence of economic overheating.

Much attention will also be paid to US tax headlines (Democratic leaders want to pass US President Joe Biden’s $ 1.9 trillion stimulus in mid-March) and statements by the chairman of the US Federal Reserve. Jerome Powell on March 4. The fiscal stimulus has been seen as a positive equity market, but if bond markets continue to sell out next week on “overheating” concerns, it may not be anymore. Regarding Powell, markets will once again be on the lookout for any signs that the Fed is increasingly concerned about recent bond market movements, especially now that ECB members have started calling for an acceleration of asset purchases.