Stock Rotation Hits Big Tech as Small Caps Recover: Markets Fall

(Bloomberg) — The S&P 500's post-election rally stalled as technology stocks took a hit, although most U.S. stocks advanced. Bitcoin surpassed $84,000 and the dollar was on track to hit its highest level in a year.

Most read on Bloomberg

Economically sensitive stocks outperformed, with the Russell 2000 index of smaller companies rising 1.5% to its highest level since 2021. A closely watched gauge of banks climbed 2.3%. Most big tech fell, with Nvidia Corp. down 2%. Tesla Inc. extended its meteoric surge. An equal-weighted version of the S&P 500, in which companies like Apple Inc. have the same weight as Dollar Tree Inc., has beaten the U.S. benchmark. This indicator is less impacted by the largest companies which offer hope that the rally will extend.

No pre-election stock flips = big post-election trades, Bank of America Corp.'s Savita Subramanian said. Election years – especially significant changes from the status quo – tend to see more active portfolio flips. So far this year, clients have maintained their positioning consistently, leaving room for further rotation through the end of the year, from tech to banks/cyclicals, from exposure to commodities green to brown raw materials, etc.

With the election and another rate cut in sight, the question is whether the bulls can continue to push the market to new highs, according to Chris Larkin at Morgan Stanley's E*Trade.

Aside from any potential profit-taking after such a rise, this week's inflation data could determine whether the market extends its gains, Larkin said.

U.S. inflation likely moved sideways, at best, in October, underscoring the uneven path to easing price pressures in the final stretch toward the Fed's target. The core consumer price index due Wednesday, which excludes food and energy, likely rose at the same rate on a monthly and annual basis compared to September's figures.

The S&P 500 was little changed, hovering near the 6,000 mark. If the index closes higher, it will be its 51st record this year. The Nasdaq 100 lost 0.3%. The Dow Jones Industrial Average gained 0.7%.

Treasury futures were slightly lower as the cash market was closed due to a U.S. holiday. The Bloomberg Dollar Spot Index rose 0.6%. Oil extended its decline as the gloomy demand outlook in China continued to weigh on the market.

The stock market could rebound more strongly toward the end of the year after Trump's presidential election victory than when he won the U.S. presidency eight years ago, according to JPMorgan Chase & Co.'s trading desk.

The story continues

I expect 2024 returns to be higher than 2016, Andrew Tyler, the bank's head of U.S. market intelligence, wrote in a note to clients on Monday. A big advantage for the S&P 500 is its weakness outside the US, with China, the UK, the EU, Canada and Mexico all seeing weaker growth than back then.

Animal spirits unleashed by President-elect Trump's economic policies will drive the S&P 500 to 10,000 by the end of the decade, according to veteran strategist Ed Yardeni.

His ultra-bullish forecast, which would represent a 66% rise by 2030, is another sign that Wall Street is becoming increasingly bullish on stock markets following the US election. Yardeni raised its year-end targets to 6,100 for 2024, 7,000 for 2025 and 8,000 for 2026.

Stock investors are also excited about the regime shift toward a more business-friendly administration favoring tax cuts and deregulation, he wrote in a note Monday.

U.S. stocks look a little stretched from a valuation, positioning and sentiment perspective, according to Lori Calvasina of RBC Capital Markets.

She says valuations have not yet peaked on either the S&P 500 or the Russell 2000, but notes there is much less room for growth in the future.

The sustainability of the stock market rally after the US election victory will depend on the behavior of the bond market, according to JPMorgan Chase & Co. strategists led by Mislav Matejka. Yields close to 5% could prove harder to stomach for risky assets, they said.

Corporate profits are expected to become a key driver of U.S. stocks as investors turn their attention back to economic growth after the election.

As the third-quarter reporting season enters its final stages, S&P 500 companies reported an 8.4% increase in profits, double the expected increase, according to data compiled by Bloomberg Intelligence. Wall Street is even more optimistic about next year, as analysts expect profits to rise 13%, the biggest increase since 2021, according to BI.

Company strengths:

Nvidia Corp. was promoted to the top ranking of large caps by Piper Sandler, which highlighted the dominance of artificial intelligence-focused chipmakers in AI accelerators, as well as the upcoming launch of its new Blackwell chip.

Cigna Group said it would not pursue a tie-up with rival Humana Inc. after reports that the two companies had resumed discussions for a deal.

AbbVie Inc. fell after two mid-stage trials of its drug to treat schizophrenia failed to meet their primary endpoint, a blow to the company's $8.7 billion acquisition of Cerevel Therapeutics more early this year.

MicroStrategy Inc. purchased about 27,200 Bitcoins for about $2.03 billion, the largest purchase made by the crypto hedge fund proxy since just after it began acquiring the digital asset more than four years ago.

Key events this week:

German CPI, ZEW survey, Tuesday

Fed speakers include Christopher Waller, Patrick Harker and Neel Kashkari on Tuesday

Fed releases survey of top bank lending officials on Tuesday

Euro zone industrial production, Wednesday

US CPI, Wednesday

Fed speakers include Jeffrey Schmid, Lorie Logan, Neel Kashkari and Alberto Musalem on Wednesday.

Eurozone GDP, Thursday

American PPI and unemployment claims, Thursday

Walt Disney Earnings, Thursday

Fed speakers include Jerome Powell, John Williams and Adriana Kugler on Thursday

Retail sales and industrial production in China, Friday

U.S. Retail Sales, Empire Manufacturing, Industrial Production, Friday

Some of the main market movements:

Actions

The S&P 500 was little changed as of 2:04 p.m. New York time

The Nasdaq 100 fell 0.3%

The Dow Jones Industrial Average rose 0.7%

The MSCI World index has changed little

The Bloomberg Magnificent 7 Total Return Index rose 0.8%

The Russell 2000 index rose 1.5%

Currencies

The Bloomberg Dollar Spot Index rose 0.6%

The euro fell 0.6% to $1.0651

The British pound fell 0.4% to $1.2865.

The Japanese yen fell 0.8% to 153.79 per dollar

Cryptocurrencies

Bitcoin rose 7.2% to $85,678.48

Ether rose 4.9% to $3,327.94

Bonds

Raw materials

West Texas Intermediate crude fell 3.1% to $68.23 a barrel

Spot gold fell 2.4% to $2,620.16 an ounce

This story was produced with the help of Bloomberg Automation.

Most read from Bloomberg Businessweek

2024 Bloomberg LP

What Are The Main Benefits Of Comparing Car Insurance Quotes Online

LOS ANGELES, CA / ACCESSWIRE / June 24, 2020, / Compare-autoinsurance.Org has launched a new blog post that presents the main benefits of comparing multiple car insurance quotes. For more info and free online quotes, please visit https://compare-autoinsurance.Org/the-advantages-of-comparing-prices-with-car-insurance-quotes-online/ The modern society has numerous technological advantages. One important advantage is the speed at which information is sent and received. With the help of the internet, the shopping habits of many persons have drastically changed. The car insurance industry hasn't remained untouched by these changes. On the internet, drivers can compare insurance prices and find out which sellers have the best offers. View photos The advantages of comparing online car insurance quotes are the following: Online quotes can be obtained from anywhere and at any time. Unlike physical insurance agencies, websites don't have a specific schedule and they are available at any time. Drivers that have busy working schedules, can compare quotes from anywhere and at any time, even at midnight. Multiple choices. Almost all insurance providers, no matter if they are well-known brands or just local insurers, have an online presence. Online quotes will allow policyholders the chance to discover multiple insurance companies and check their prices. Drivers are no longer required to get quotes from just a few known insurance companies. Also, local and regional insurers can provide lower insurance rates for the same services. Accurate insurance estimates. Online quotes can only be accurate if the customers provide accurate and real info about their car models and driving history. Lying about past driving incidents can make the price estimates to be lower, but when dealing with an insurance company lying to them is useless. Usually, insurance companies will do research about a potential customer before granting him coverage. Online quotes can be sorted easily. Although drivers are recommended to not choose a policy just based on its price, drivers can easily sort quotes by insurance price. Using brokerage websites will allow drivers to get quotes from multiple insurers, thus making the comparison faster and easier. For additional info, money-saving tips, and free car insurance quotes, visit https://compare-autoinsurance.Org/ Compare-autoinsurance.Org is an online provider of life, home, health, and auto insurance quotes. This website is unique because it does not simply stick to one kind of insurance provider, but brings the clients the best deals from many different online insurance carriers. In this way, clients have access to offers from multiple carriers all in one place: this website. On this site, customers have access to quotes for insurance plans from various agencies, such as local or nationwide agencies, brand names insurance companies, etc. "Online quotes can easily help drivers obtain better car insurance deals. All they have to do is to complete an online form with accurate and real info, then compare prices", said Russell Rabichev, Marketing Director of Internet Marketing Company. CONTACT: Company Name: Internet Marketing CompanyPerson for contact Name: Gurgu CPhone Number: (818) 359-3898Email: [email protected]: https://compare-autoinsurance.Org/ SOURCE: Compare-autoinsurance.Org View source version on accesswire.Com:https://www.Accesswire.Com/595055/What-Are-The-Main-Benefits-Of-Comparing-Car-Insurance-Quotes-Online View photos