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Author Bhushan Akolkar
Bhushan is a FinTech enthusiast and holds a good flair in understanding financial markets. It follows that . ?? In free time he reads thriller fictions novels and sometimes explore his culinary skills.
Despite concerns of inflation and rising interest rates, the stock market displayed bullish behavior on the expectation of a quick economic recovery. Fed Chairman Jerome Powell has warned that inflation will be slow to pick up. On February 24, the Dow Jones Industrial Average recorded strong intraday movement resulting in a new record high.
While investors remained skeptical of inflation fears and rising interest rates, the stock market ended the day up 110 points. (DJI) increased by 424 points, for a gain of 1.35%.
With this, the Dow Jones closed 31.961 points above its previous record high. Several stocks from the energy, financial and industrial sectors enjoyed strong performances.Stocks that Pushed Dow to New LevelsVisa Inc. (NYSE: V) and Goldman Sachs (NYSE: GS) each scaled new highs during the trading session. In contrast, Chevron (NYSE: CVX) gained over 3.6% on Wednesday while Boeing Co (NYSE: BA) gained over 8%.
Stocks that Pushed Dow to Record Levels
Both Visa Inc (NYSE: V) and Goldman Sachs (NYSE: GS) stock jumped 3.5% during the trading session. Boeing Co (NYSE: BA) stock jumped over 8% while the Chevron (NYSE: CVX) stock jumped over 3.6% on Wednesday. The Nasdaq Composite Index (INDEXNASDAQ: ) and the NASDAQ have both emerged as successful investment vehicles.
Both – S&P 500 (INDEXSP: .INX) and the Nasdaq Composite (INDEXNASDAQ: .IXIC) surged 1% each. The 10-year treasury yield shooting to 1.4% put severe pressure on the technology stocks. In its low-interest rate environment, growth companies have benefited the most from the rising bond yields.
In a note to clients, Christopher Metli, a quantitative and derivative strategist at Morgan Stanley, wrote, “Higher rates will continue to push more risk into sectors and factors, and dips in the market are meant to be bought in this environment”. Inc (NASDAQ: AMZN), Apple Inc (NASDAQ: AAPL), and Facebook Inc (NASDAQ: FB) trading higher despite varying price levels but resulting in a loss. Inc (NASDAQ: AMZN), Apple Inc (NASDAQ: AAPL), and Facebook Inc (NASDAQ: FB) were all trading higher from their lowest levels although ultimately ending up in the red. In a note to clients, Christopher Metli, a quantitative and derivative strategist at Morgan Stanley wrote:
“Volatility along the way is to be expected, and higher rates will continue to drive more risk down into sectors and factors, but … dips in the equity market are meant to be bought in this environment”.
It could be three years for the central bank to consistently meet its targets, he added.
Jerome Powell, the Federal Reserve chairman downplayed the threats of inflation. Bitcoin's (BTC) attraction to large institutional money is due in large part to the fears associated with inflation. Bitcoin is viewed as a hedge against inflation by the big players.
Managing partner at Ned David Research, Ed Clissold, stated in a note: “Higher interest rates could moderate broad market gains, and multiples should compress as early cycle themes begin to bear fruit”. During the sharp correction on Tesla Inc’s (NASDAQ: TSLA) share price on Tuesday, Ark Investment’s Cathie Wood made a major investment. The asset management firm purchased $120 million of TSLA shares for its flagship Ark Innovation ETF. Ed Clissold, chief U.S. strategist at Ned David Research, said in a note:
“Higher interest rates could moderate broad market gains, multiples should compress, and the last phase of early cycle themes could lead to Value exerting much-awaited leadership over Growth”.
During the sharp correction of the Tesla Inc (NASDAQ: TSLA) stock on Tuesday, Ark Investment’s Cathie Wood made a huge purchase. Sharing his acquired knowledge keeps him motivated because he's always learning.
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