Stocks were mixed by midday, after having been solidly up in the morning.
The S&P 500 was up 0.4% by noon, even with the tech-heavy Nasdaq flat-to-down. Although inflation data was strong, the 10-Year Treasury yield slipped to 0.67%, after having been up to start the day. Yields fall when prices rise. The Federal Reserve’s bond-buying program is overwhelming any added supply or selling of the bond.
Consumer price inflation was 0.4% for August, beating the estimate of 0.3%, just after producer price inflation beat estimates Thursday. And cyclical stocks were indeed up, with consumer discretionary up 0.5%. But overall, inflation is weak and the speed of the economic recovery hasn’t recently been what it was in June and July. Companies with poor balance sheets, like the major airline companies, were down. Companies with strong balance sheets and secular growth drivers — like Nike (NKE) - Get NIKE, Inc. (NKE) Report with its strong digital business — rose as much as 3%.
Tech stocks continued to face pressure. Tech stocks have risen in some brief moments this week, as investors buy the dip after the correction over the past week and a half. But tech stocks are potentially in the midst of a valuations rerating, as many companies that offer high-growth and at-home services may be experiencing a massive pull-forward of demand. In the morning tech stocks were largely up. The Nasdaq is still a little over 8% off of its level pre-sell-off.