Stocks flipped into the red by midday Thursday, as investors ease their buying that has led some on Wall Street to say the market is a bit overextended for now. Investors piled into tech stocks, some of which are strong business that aren’t hut by the coronavirus-induced recession.
The S&P 500 fell more than 0.5% and the Dow Jones Industrial Average fell more than 1.2%, after having flickered between the red and green to stat Thursday. The tech-heavy Nasdaq rose as much 1.2%, before moderating to a gain of 0.2%.
The move to safety was still on, with the 10 year treasury yield slipping to 0.6% from 0.63% Wednesday. Stocks are slightly down for the week and th 10 year treasury yield is down from 0.76% earlier in the week.
The S&P 500, up about 23% from its March 23 low, had looked past the virus and recession, pricing in an optimistic scenario for an economic and earnings round in the second half of 2020 and in 20201. Many say stocks, now valued richly for this point in the economic cycle, will be range bound or even in sell-off mode for the near-term.
Jobless claims in the past week were over 5 million, meaning rough 15 million people have filed in the past month or so, an insignificant portion of the population. And that’s just the number encapsulated by the recent data. Investors had known this, and Germany and the U.S. potentially reopening parts of the economy has validated positive the sentiment that has faded this week.
Investors looking for supreme alpha return have moved into technology companies with stable businesses that are either seeing tailwind from the virus-induced recession or no headwind. Amazon (AMZN) - Get Report, Netflix (NFLX) - Get Report and Microsoft (MSFT) - Get Report rose 6.6%, 3.2% and 1.8%, respectively Thursday.
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