FINSUM + Magnifi: Why the Nasdaq is Really Dropping
(March 2021)
The ten-year treasury yield hit one year high at 1.6% on Friday, just after President Biden signed the $1.9 trillion stimulus package into law. Some are arguing that this is a new equilibrium for a healthy U.S. economy; others are concerned that inflation is on the rise. The rest of the market was mixed as the Dow Rose on open and the S&P fell. The bigger story is tech stocks, as the Nasdaq fell over a percentage point on open. Some are pointing the fingers at increased regulation in China as tighter regulation affects the whole sector. However, others believe it’s the increase in bond yields that point to the reason for technology faltering. Inflation erodes future cash flows and if the Fed raises rates in the short run that could limit growing companies' access to cheap liquidity. Meanwhile, vaccine companies did well among the news of increased effectiveness in the U.K.
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FINSUM + Magnifi: The Nasdaq Correction May Be Signaling a Bear Market
(February 2021)
The market had eagerly awaited Fed Testimony before Congress on Tuesday as investors wanted clarity on rising inflation concerns, but it appears investors didn’t take the ‘sit and wait’ approach. A bearish surge in overnight trading and on open primarily in tech stocks weighed the market down. Inflation concerns are driving this slump as many tech companies are dependent on cash flows. Tech concentrated index NASDAQ already had a hard Monday down 2.5% but fell off another 1.8% on Tuesday. What would normally be a bullish sign for markets appears very bearish as Powell tells congress inflation is soft and the Fed remains on track to hit its target. Treasury yields have been on the rise as the markets are in lockstep with the Fed, hitting an annual high of 1.39%. Powell says that it will move patiently and slowly telegraphing its moves amid inflation pressures.
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