The S&P 500 fell 0.1%, kept at that level by the components of the tech-heavy Nasdaq, which rose 0.2%. The 10-Year Treasury yield rose to 0.73%, signaling investors are getting more comfortable with the possibility of inflation post-recovery from the pandemic. The yield had already reflected the 0% benchmark lending rate, before the Federal Reserve’s announcement of a new, highly inflationary policy.
Apple (AAPL) - Get Report and Tesla (TSLA) - Get Report, which have a combined market capitalization of about $2.6 trillion, rose 2% and 3%, respectively. Both companies performed stocks splits. Apple’s 4-for-1 split — meaning that for every share a shareholder owns he or she gets four shares at one quarter of the prior price — brings the price down to just above $125. Tesla’s 5-for-1 brings the price down to $445. This makes buying the stock more affordable on a pure dollar basis for the relail — or average — investor.
While yields on safe bonds continue to rise, cyclical value stocks were largely flat, with some sectors slightly in the red and others slightly in the green. Banks fell slightly even as the yield curve expanded. Oil stocks rose a few tenths of a percentage point.
This comes even as FDA Commissioner Stephen Hahn said he may consider granting emergency authorization for a Covid-19 vaccine before clinical trials are finished. If Hahn’s consideration comes to fruition, the economy could rebound even fast than expected, which would be a substantial positive for stocks.
Stock investors have gotten used to the idea that there will be a vaccine relatively soon, a development tat has powered the market to new highs, even though growth tech stocks continue to lead the major indices. Now, investors are looking for continued clues of a fast recovery, while negative vaccine surprises could dent the market.
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