Marketbites: Markets Rise Despite Higher Treasury Yields
Portfolio Manager Commentary:
The Nasdaq Composite snapped a four-day losing streak on Monday, even as Treasury yields reached levels not seen in over a decade. Palo Alto Networks rallied 14.5% on stronger-than-expected earnings, and Nvidia popped 8.3% ahead of its earnings report due Wednesday. Tesla and Meta climbed 7% and 2.4%, respectively. The S&P 500 tech sector gained 2.26% on Monday.
These moves came even as the benchmark 10-year yield hit a high of 4.34%, reaching its highest level since November 2007. Yields, which rise when bond prices fall, are typically bad for tech and other growth stocks as they lessen the value of their promised future earnings. That made the day’s tech gains notable.
Monday's moves come after weekly losses on Wall Street, which added to the market's late summer slump. The S&P and Nasdaq each fell for a third straight week, while the Dow had its biggest weekly decline since March.
This week, investors are anticipating an address Friday morning from Federal Reserve Chair Jerome Powell at the central bank’s annual symposium at Jackson Hole, Wyoming.
Chart of the Day:
Despite high inflation and interest-rate challenges, retail shops have been a bright spot in commercial real estate. Retailers are on track to open 1,000 net new stores in the U.S. this year as retail availability hits record lows, in fresh signs of the sector’s resilience despite turmoil in commercial real estate.
Landlords say demand for retail space has remained robust this year, defying inflation pressures, high interest rates and liquidations including Bed Bath & Beyond and Christmas Tree Shops. Retail’s strength is largely the result of a sharp drop in retail construction since the 2008-09 financial crisis, which allowed the oversupplied sector to digest its existing real estate. Retailers, meanwhile, started using online sales data and analytics technology to pinpoint locations for successful stores.
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