BusinessWall Street closes lower as inflation fears prompt tech sell-off
Stephen Culp
3 minute read
Wall Street closed lower on Monday as inflation jitters drove investors away from market-leading growth stocks in favor of cyclicals, which stand to benefit most as the economy reopens.
Industrial and healthcare shares limited the Dowâs decline but the blue-chip average reversed course late in the session to snap a three-day streak of record closing highs.
âThe market leadership is not doing all that well this year,â said Paul Nolte, portfolio manager at Kingsview Asset Management in Chicago. âThereâs been a general rotation away from growth to other parts of the market.â
Dow reaches all-time high on commodity surge; S&P, Nasdaq drop
By Stephen Culp
Reuters
NEW YORK (Reuters) - Wall Street was mixed on Monday, with economically sensitive cyclical shares advancing as investors shifted their bets in favor of stocks that stand to benefit most as the economy reopens and the consumer, flush with stimulus and savings, brings demand roaring back to life.
Tech shares reversed Friday s gains, pulling the S&P 500 and the Nasdaq into negative territory, while industrial and healthcare shares set the blue-chip Dow on course for its fourth consecutive all-time closing high. You continue to see this rotation between tech-plus and cyclicals, and certainly the spike in inflation of input costs benefits cyclicals in terms of pricing, said Tim Ghriskey, chief investment strategist at Inverness Counsel in New York.
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CHICAGO: U.S. Treasury yields rebounded after hitting two-month lows on Friday following data that showed a much smaller-than-expected jobs gain in April, with yields on longer-dated debt rising for the session as investors remained confident the economy was on the road to a strong recovery.
The benchmark 10-year yield, which dropped to 1.469 per cent, the lowest since March 4, was last up 1.6 basis points on the day at 1.5771 per cent, holding below a 14-month high of 1.776 per cent reached on March 30. The 30-year yield tumbled to its lowest level since March 1 at 2.158 per cent. It was last 4.4 basis points higher at 2.28 per cent.
May 5, 2021
Legendary investor and Berkshire Hathaway CEO/chairman Warren Buffett sees “substantial inflation” on the horizon, boosting the case for assets like the
Gold, commodities, and Treasury inflation-protected securities (TIPS) are just a few ways to hedge against the rising tide of inflation. An ETF like VTIP can help investors hedge in this manner without having to purchase individual hedging components.
“We are seeing very substantial inflation,” Buffett said at the conglomerate’s annual shareholder meeting this past weekend. “It’s very interesting. We are raising prices. People are raising prices to us and it’s being accepted.”
“We’ve got nine homebuilders in addition to our manufacture housing and operation, which is the largest in the country. So we really do a lot of housing. The costs are just up, up, up. Steel costs, you know, just every day they’re going up,” the legendary investor added.