Tech stocks fell Monday, while most other sectors rose. The selling in tech was serving as a drag on the S&P 500.
In a mostly risk-on market, the S&P 500 was largely flat, as the tech-heavy Nasdaq fell 0.7%. The 10-Year treasury yield was flat at 0.57%. Most days in August, the yield has been pressured, as bond investors expect the Federal Reserve to increase the size of its stimulus program if yields rise too high. So if the yield is flat, rather than down while cyclical stocks, or those that are inflation sensitive, are rising, the market looks risk-on.
As Congress, less willing to spend than earlier in the year, scrambles to finalize another stimulus bill, President Trump authorized states and the federal government to pay a total of $400 to each unemployed person currently. That fiscal stimulus would be less than the previous amounts of $600 per week before those benefits expires this yea
Questions over the legitimacy of these executive orders remain. Investors are hoping any fiscal stimulus will be sufficient and speedy enough for failing small businesses and hurting households, although investors are encouraged by what they see Monday.
Large cap cyclical sectors were up big Monday. Banks rose just under 2%. Consumer discretionary rose as much as 3%. Industrials and materials both rose more than 2%.
While tech was reeling, Twitter (TWTR) - Get Twitter, Inc. Report was up more than 2%, as the company is reportedly speaking with TikTok about buying the Chinese-owned company, which analysts say is worth roughly $40 billion to $450 billion. President Trump has said American companies have a bit more than a month to finalize a potential purchase of the company before operations in the U.S. are shut down. That’s part of a wider agenda in the White House to keep Chinese entities from obtaining U.S. tech and intellectual property.
Microsoft (MSFT) - Get Microsoft Corporation (MSFT) Report is in on TikTok as well. The shares had rallied initially, as the tech giant looked well-positioned to buy the company, the chances of which are lowered with Twitter in on the action, although Microsoft would find it financially easier to make the acquisition, and would be a better buyer for the company according to Jim Cramer. Microsoft fell 2.6%.
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