Investors switch portfolios due to unexpected rate cut
Traders on the floor of the New York Stock Exchange.
Tech and growth stocks are making a comeback with some investors, and the trend has been helped by a surprise drop in bond yields.
the 10-year cash flow the yield was 1.46% on Friday, after hitting 1.43% on Thursday, its lowest level since March 3. Yields move opposite to price, and the yield fell well below last week’s close of 1.56%.
Strategists said lower yields helped give technology a boost and some growth names, like the ARK Innovation ETF, up 1.9% Thursday and more Friday. The S&P information technology sector was up half a percent on Friday and up 1.2% for the week. Cyclical sectors that were up, such as materials and financials, were down this week through Friday morning, losing 2.7% and 2% respectively.
“With lower interest rates, some investors who had been on the close now have reason to be more bullish about tech stocks,” said Sam Stovall, chief investment strategist at CFRA. “I think in the short term you have better potential for growth than value, which would increase the potential for value down the road.”