Stock gains were muted by midday Wednesday. In the morning, the S&P 500 was up a bit, before tech stocks brought the index down.
By 12:20 PM EDT, the S&P 500 was down a bit less than 0.1%, with the tech-heavy Nasdaq down 0.1%. Large cap tech stocks were down and have overall traded in a sideways manner since the beginning of September, as investors await earnings amidst still-high valuations. The 10-Year Treasury yield rose to 0.81% from 0.80%, up from 0.71% about a week ago. Investors are optimistic on the contused speed of the economic recovery, which has slowed a bit of late.
"The market is taking a well needed pause,” Hank Smith, Head of Investment Strategy at Haverford Trust told TheStreet. "We have come a long way since march 23. It’s healthy to have a pause. The odds of something worse than a pause like a bear market are very small. Bear markets come in anticipation of recessions.”
Large cap value stocks, many of which are sensitive to changes in the economy, were roughly flat.
In tech, Netflix (NFLX) - Get Report sunk 6% to about $500 a share after the company posted just over 2 million subscribers added, missing analysts estimates of just over 3 million. Netflix said it is looking for a slight rebound in the current quarter, but saw a massive pull-forward of demand in the first half of the year, driven by the pandemic. Investors are pricing in near-term pressure to revenue and earnings.
The S&P 500 is up about 10% since the end of September, but down about 1% in the past several days. Earnings may show a path forward for the economic recovery, but election-related volatility is expected, especially in light of ballot-counting concerns and fiscal stimulus and coronavirus vaccines still come with question marks.
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