Week in Review: Bad Week for Growth Stocks
Last week was shortened in observance of Good Friday, but it was a “Bad Week” for growth stocks amid upwards pressure in interest rates. The impact of the growth stocks was reflected in the underperformance of the S&P 500 (-2.1%) and Nasdaq Composite (-2.6%) relative to the Dow Jones Industrial Average (-0.8%) and Russell 2000 (+0.5%).
The small-cap index closed higher, while the S&P 500 fell further below its 200-day moving average (4495) and even closed below its 50-day moving average (4418). The information technology (-3.8%), communication services (-3.0%), health care (-2.9%), and financials (-2.7%) sectors led the retreat.
The declines in the first two sectors were linked to the moves in the Treasury market, where the 10-yr yield rose another 12 basis points to 2.83% despite a return of the peak inflation narrative. That narrative was supported by a brief, two-day decline in rates following hot CPI and PPI data for March.
The Vanguard Mega Cap Growth ETF (MGK) fell 3.3%, whereas the Invesco S&P 500 Equal Weight ETF (RSP) decreased “just” 0.9%.
The financials sector, in particular, was pressured by an EPS miss from JPMorgan Chase (JPM) and a revenue miss from Wells Fargo (WFC). The other banks, for the most part, reported better-than-expected earnings results with mixed reactions.
There were some positives, though. The materials (+0.7%), industrials (+0.4%), energy (+0.3%), and consumer staples (+0.2%) sectors ended the week in positive territory.
Airline stocks were strong after American Airlines (AAL) raised its Q1 revenue guidance and Delta Air Lines (DAL) supplemented better-than-expected earnings results with upbeat bookings commentary. The U.S. Global Jets ETF (JETS) rallied 8.0% this week.
Source: Briefing Investor