- The S&P 500 trades laterally and is resistant to global risk amid the strength of the technology sector.
- The passage of Biden’s $ 1.75 trillion BBB spending package in the House failed to lift spirits for cyclical stocks.
Up to now, US equity markets they have proven to be quite resilient despite the slowdown in global risk appetite triggered by fears that Europe will once again be locked in. While the main European stock exchanges carry losses of between 0.2% and 1.7% in the session, the S&P 500 is currently trading unchanged at 4,710, just a few points from the all-time highs touched at the beginning of the month at 4,718.50 .
The resistance of the S&P 500 is due to its much heavier weighting towards the technology sector than in European indices. The Nasdaq 100 (a proxy for the tech sector) is currently trading higher, up 0.7% on the session amid notable gains in tech big names that came out very well from the pandemic. The Nasdaq 100 index rose above the 16,500 level for the first time on Friday and even managed to reach the 16,600 level. “Stay-at-home names” like Netflix, which benefit from increased engagement when people spend more time at home during pandemic shutdowns, won on Friday.
A sharp drop in long-term US bond yields amid increased demand for safe-haven assets is helping the tech sector. Falling bond yields lower the opportunity cost of owning “growth stocks” (typically tech stocks), which are stocks whose valuation is disproportionately based on growth expectations of future earnings rather than current earnings. .
The Dow, which is less inclined towards big tech, fell 0.5% on Friday. News that the US House of Representatives had approved US President Joe Biden’s $ 1.75 trillion social spending package “Rebuild Better” failed to boost cyclical stocks – stocks whose performance is most closely correlated with performance. economy). This is probably because there is no guarantee that the bill will pass the Senate; Moderate Democratic Senator Joe Manchin is concerned about inflation and reportedly wants to delay further fiscal stimulus until 2022.
The drop in earnings hit bank stocks, with the S&P 500 financial index falling more than 1.0%, which weighed on the Dow Jones. Energy stocks also performed poorly amid a sharp drop in crude oil prices, which also weighed on the Dow Jones. The S&P 500 energy sector was down almost 4.0%.
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