The market’s anxiety over rising bond yields reached a new level on Thursday that sent the major indices plunging. The NASDAQ continues to bear the brunt of these concerns by dropping more than 3.5%.
Basically, the 10-year Treasury yield momentarily soared to just above 1.6% today for its highest point in a year. It pulled back a bit and settled just over 1.5%, which is still too high for many investors’ comfort.
Rising bond yields have been the big story in the second half of February. Fed Chair Jerome Powell tried to calm investor concerns twice this week in his testimonies to Congress, but it was to no avail today as money continues to flee technology.
The NASDAQ had its worst session of the year so far, which is saying something since its been under pressure for a while now. The index plunged 3.5% today (or about 478 points) to 13,119.43... and this is after dropping 2.5% on Monday. It is down 5.8% for the week heading into Friday.
The FAANGs were all lower, including declines of more than 3% for Facebook (NASDAQ:FB), Apple (NASDAQ:AAPL), Amazon (NASDAQ:AMZN) and Alphabet (NASDAQ:GOOGL) (GOOG). Tesla (NASDAQ:TSLA) was down more than 8% and Microsoft (NASDAQ:MSFT) slipped over 2.3%.
The S&P, which has a good amount of exposure to tech as well, dipped 2.45% to 3829.34, while the Dow was off 1.75% (or nearly 560 points) to 31,402.01. These indices are down 2% and 0.3%, respectively, over the past four days.
Unfortunately, this news overshadowed a pretty good jobless claims report. Approximately 730,000 claims were filed last week, which was more than 100K better than expectations of around 850K. The result ended a couple weeks of missed forecasts.
It looks like the NASDAQ and S&P are primed for another negative weekly performance, though the Dow might be able to eke out another advance. However, the major indices are still all positive for February heading into the month’s final session, which goes to show just how strong things were before the bond yield spike.
Today's Portfolio Highlights:
Income Investor: Oil prices are finally rebounding after sinking to historic lows in 2020, so Maddy thinks it’s time to regain some energy exposure for the portfolio. Chevron (NYSE:CVX) looks well positioned to take advantage of the industry’s improving prospects, so this oil & gas giant was added on Thursday. The editor really likes its financial position, as CVX kept spending in check during the lean times, yet still managed to make the key acquisition of Noble (OTC:NEBLQ) Drilling. Furthermore, the company offers a “generous” dividend that yields 5% on an annual basis. It has been rewarding shareholders with annual dividend increases for more than 30 years now. Make sure to read the complete commentary for more specifics on today’s addition.
TAZR Trader: This overvalued market is running right into the "teeth" of rapidly-rising interest rates. Kevin thinks the odds of a bigger correction are rising, as large investment managers are likely making adjustments behind the scenes. The editor decided to sell a significant portion of the portfolio on Thursday to take profits and cut risk as we head toward the uncertainty. He sold seven names today... and six of them brought double-digit returns! The stocks that left the portfolio on Thursday included:
• Infinera (NASDAQ:INFN, +48.4%)
• Inseego (NASDAQ:INSG, +30.3%)
• Elastic N.V. (NYSE:ESTC, +29%)
• Shopify (NYSE:SHOP, +28.4%)
• Talend (TLND, +21.8%)
• Square (SQ, +18.9%) -- sold half
• Vaxart (NASDAQ:VXRT) -- sold half
Learn a lot more about these moves in the complete commentary, including Kevin’s explanation of the “centrifugal” force of a risk unwind.
Surprise Trader: The portfolio is giving Purple Innovation (NASDAQ:PRPL) another shot. Dave added this mattress and pillow company last year, but it didn’t do much for the service. However, the editor still likes the name, especially since it has put together eight straight quarters of positive surprises. The most recent beat was 8%. PRPL has a positive Earnings ESP of 4.76% for the quarter being reported before the bell on Thursday, March 4. Dave added PRPL today with an allocation of 12.5%, while also getting out of the underperforming Covanta (CVA) position. Read the full write-up for more.
Technology Innovators: Shares of NetScout Systems (NTCT) touched new highs after reporting a solid quarter. However, it has since pulled back, which is giving Brian a great opportunity to pick up this business assurance leader at a great price. NTCT has beaten the Zacks Consensus Estimate in each of the past four quarters with an average surprise of 16%. Rising earnings estimates have made the stock a Zacks Rank #2 (Buy) and it’s valuation is “super cheap”. Brian thinks this name will really take off as things return to normal after the pandemic. The portfolio also cut a couple “losers” on Thursday by selling Avid Technology (NASDAQ:AVID) and Twilio (NYSE:TWLO). Read the full write-up for more on today’s action.
Until Next Time,
Jim Giaquinto
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