New York (Reuters)
The S&P 500 stock index, which weighed relatively heavily on shares of financial, energy and other economically sensitive companies, rose 5.5 percent from a month earlier, more than a percentage point higher than its tech-savvy counterpart. has accelerated over the past week. The price index has risen by 18% this year, despite a halt after a strong start to 2021.
The move could signal the start of so-called inflation trading, a bet on economic recovery, which has seen stocks rise since the end of last year, along with treasury returns. This time, the yield has risen as the yield on the US Treasury 10-year benchmark, which is moving in the opposite direction to prices, has risen by about 20 basis points since last week to 1.36%, before retreating on Friday.
“I think the value is a somewhat twisted source,” said Matt Peron, director of research at Janus Henderson Investors, who thinks the value could be exceeded for at least the next six months. “I think there is still one race left.”
Investors point to several reasons for the more rosy outlook on value. “Whether the increase in coronavirus cases in the Delta version remains a wild card, the signs that infections may be slowing down in Europe and parts of the United States may mean that last year’s blockades will not be needed in the foreseeable future,” Peron said.
At the same time, some investors believe that growth will continue in the US, even after the peak of the second quarter. According to Oxford Economics, the US gross domestic product will grow by 6.1% in 2021 and by 4.8% in 2022, which is stronger than the annual growth of the last decade.
“We have not seen such high growth rates for some time, so we think the value may exceed even when the growth rate reaches its peak,” said Samir Samana, senior market strategist at Wells Fargo Investment Institute.
Among those calling for more securities growth are JPMorgan tech strategists, who said last week that the S&P 500 price index “looks ready for a breakthrough.” Truist Advisory Services said on Wednesday that it expects greater value growth in the next 12 months, given the still strong economic outlook and weak revenue trends in technology compared to the wider market.
After the 10-year yield fell last week, the S&P 500 value index rose 2.4% against its partner 0.5% growth.
The return on equity comes as investors digest data on potential inflation, while waiting for the Federal Reserve’s Jackson Hall Symposium at the end of the month. That event, or the next central bank policy meeting in September, could signal when it will launch its $ 120 billion-a-month bond-buying program, which has boosted asset prices.
Next week’s U.S. Retail Sales Monthly report ները Earnings from retailers such as Walmart և Target could shed more light on consumer health.
Investors are also closely monitoring the profitability of the treasury. Higher yields are also particularly beneficial for banks’ profit margins, which tend to make up the majority of value indices.
There are still many temptations to trade in value. Signs that the coronavirus is threatening the economic outlook could send investors back to large shares of technological growth that worked well for most of 2020. Data on Friday showed that consumer confidence fell to its lowest level in a decade, on profitability.
Treasury returns also fluctuated sharply this year, leading investors to make the wrong move. On August 4, the 10-year yield fell to 1.13%, about 65 basis points from a year-on-year high.
Many investors may also be reluctant to over-reduce the growth of equity stocks, which dominated the decade following the 2007-2009 financial crisis while weakening equity stocks.
“This is an epic battle between these two market segments,” said Matthew Miskin, co-founder of Matthew von Hancock Investment Management Strategy.
(Report: Lewis Krauskoff, edited by Ira Iosebashvili և Aurora Ellis)
Copyright 2021 Thomson Reuters.