Nasdaq falls a second day | Oil stocks rise as Biden says U.S. will tap reserves | BofA's 2022 prediction for stocks
EDITOR'S NOTE
Another rise in Treasury yields on Tuesday helped to create a divide in the stock market, with high-growth tech stocks sliding while bank and energy names moved higher.
That split makes this week something like a microcosm of 2021 as a whole, which has seen energy outperform while some of the top stocks during the pandemic, such as Zoom Video, have deflated. Cathie Wood's Ark Innovation ETF, which holds many stocks in the high-growth bucket, fell more than 2% on Tuesday.
Rising rates are seen as bad news for high-growth stocks, as they make future earnings less appealing, but the size of the recent moves means that some of these declines may be reaching their endpoint, said Stephanie Link, chief investment strategist and portfolio manager at Hightower Advisors.
On the other hand, Link said that the high concentration of the S&P 500 — with 10 stocks making up more than 30% of the index — suggested that some of the biggest trades were crowded, potentially creating downside pressure for some of the market's most successful stocks.
"I think they're very well owned, I think they've had an enormous run. Could they be vulnerable? Yeah, sure. I'm not saying crash by any means, but that's a big stat," she said.
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