As interest rates rise and large technology companies drag the market down, the stock market may decline further

Read Time:3 Minute, 6 Second


On July 16, 2021, traders on the New York Stock Exchange bear the Blend sign.

Source: New York Stock Exchange

Strategists believe that after the stock sell-off on Tuesday, there will be more sell-offs in the future, led by technology stocks and large growth stocks.

A sort of Interest rates have risen sharply in the past few trading days It hurts the market, especially growth stocks. At Tuesday’s high, the yield on the benchmark 10-year Treasury note climbed to 1.56%, an increase of approximately 25% since the Federal Reserve meeting last Wednesday.

this Standard & Poor’s 500 Index Closed down 2%, while Nasdaq Due to the high concentration of technology stocks in the index, the stock price fell 2.8%. Ten of the 11 sectors of the Standard & Poor’s 500 Index fell, while the technology sector fell 2.9%. Energy is the only riser, up 0.4%

Katie Stockton, founder of Fairlead Strategies, said: “We have seen a decline in the gap generally driven by large-cap stocks, which is currently down 2% to 5%.” Apple, Amazon, Facebook, Nvidia with Microsoft.

She said these names “obviously are the biggest drag on the stock market.” “Because they are the biggest, it shakes emotions.”

Stockton said those stocks, plus Tesla, Accounting for about 25% of the S&P 500 Index.

“Pay close attention to the momentum behind them,” she said. “Only their pure footprint can cause problems. When they do, it affects emotions. People rely on Google and Microsoft to never fall. Now, they are undergoing a reality check.”

Stockton added that she is focusing on the S&P 500’s downside target of 4,238, which was the previous level of support. The S&P 500 index closed at 4,352.63 on Tuesday.

Sam Stovall, chief investment strategist at CFRA, said he has always expected a sell-off. He also pointed out that the S&P 500 index may test 4,128 points, the 200-day moving average. Stovall said that falling to this level will make it more than 5% lower than the current level, and drop by about 10% from peak to trough.

Below critical level

The S&P 500 index was below its 50-day moving average on Tuesday, after the index rebounded and rebounded above it last weekend. Last week, there was an obvious violation of 50 days. 50 days is the average of the closing prices of the past 50 days. When the index falls below the index, it is regarded as a negative momentum indicator.

Stovall said the decline in large-cap stocks is significant.

“If the generals start to get hit, it shows that everyone is vulnerable, so it seems that as interest rates rise and technology stocks fall 2.5%, I think there is more downside potential,” Stovall said.

Large technology companies and growth companies are sensitive to higher interest rates because their high valuations are based on future growth and cash flow. When interest rates rise, the value of future cash flows is discounted.

But Oppenheimer technical analyst Ali Wald said that the fact that large technology companies are selling means that popular large-cap growth stocks are joining many other stocks that have fallen sharply.

“It has not overflowed into the market, now it has overflowed. We think this is a sign of surrender,” he said. Wald added that he believes that the S&P 500’s July low of about 4,230 points has more downside.

Stovall said that any correction seems to be under control and will not become a bear market. “Unless we make projections on earnings, GDP and interest rates, I don’t think this will go beyond the correction range,” he said.

Happy
Happy
0 %
Sad
Sad
0 %
Excited
Excited
0 %
Sleepy
Sleepy
0 %
Angry
Angry
0 %
Surprise
Surprise
0 %
We use cookies to personalise content and ads, to provide social media features and to analyse our traffic. We also share information about your use of our site with our social media, advertising and analytics partners. View more
Cookies settings
Accept
Decline
Privacy & Cookie policy
Privacy & Cookies policy
Cookie name Active

Who we are

Suggested text: Our website address is: https://updatednews24.com.

Comments

Suggested text: When visitors leave comments on the site we collect the data shown in the comments form, and also the visitor’s IP address and browser user agent string to help spam detection. An anonymized string created from your email address (also called a hash) may be provided to the Gravatar service to see if you are using it. The Gravatar service privacy policy is available here: https://automattic.com/privacy/. After approval of your comment, your profile picture is visible to the public in the context of your comment.

Media

Suggested text: If you upload images to the website, you should avoid uploading images with embedded location data (EXIF GPS) included. Visitors to the website can download and extract any location data from images on the website.

Cookies

Suggested text: If you leave a comment on our site you may opt-in to saving your name, email address and website in cookies. These are for your convenience so that you do not have to fill in your details again when you leave another comment. These cookies will last for one year. If you visit our login page, we will set a temporary cookie to determine if your browser accepts cookies. This cookie contains no personal data and is discarded when you close your browser. When you log in, we will also set up several cookies to save your login information and your screen display choices. Login cookies last for two days, and screen options cookies last for a year. If you select "Remember Me", your login will persist for two weeks. If you log out of your account, the login cookies will be removed. If you edit or publish an article, an additional cookie will be saved in your browser. This cookie includes no personal data and simply indicates the post ID of the article you just edited. It expires after 1 day.

Embedded content from other websites

Suggested text: Articles on this site may include embedded content (e.g. videos, images, articles, etc.). Embedded content from other websites behaves in the exact same way as if the visitor has visited the other website. These websites may collect data about you, use cookies, embed additional third-party tracking, and monitor your interaction with that embedded content, including tracking your interaction with the embedded content if you have an account and are logged in to that website.

Who we share your data with

Suggested text: If you request a password reset, your IP address will be included in the reset email.

How long we retain your data

Suggested text: If you leave a comment, the comment and its metadata are retained indefinitely. This is so we can recognize and approve any follow-up comments automatically instead of holding them in a moderation queue. For users that register on our website (if any), we also store the personal information they provide in their user profile. All users can see, edit, or delete their personal information at any time (except they cannot change their username). Website administrators can also see and edit that information.

What rights you have over your data

Suggested text: If you have an account on this site, or have left comments, you can request to receive an exported file of the personal data we hold about you, including any data you have provided to us. You can also request that we erase any personal data we hold about you. This does not include any data we are obliged to keep for administrative, legal, or security purposes.

Where we send your data

Suggested text: Visitor comments may be checked through an automated spam detection service.
Save settings
Cookies settings