On Friday, the Dow saw gains and the S&P 500 closed weak due to volatility. Bank shares rose. On the other hand, investors were worried about the economy slipping as the Federal Reserve took an aggressive stance to tackle inflation. The yield on the benchmark 10-year US Treasury rose to a three-year high of 2.73%. That boosted the S&P banking index, which rose 1.18% after falling to a 13-month low on Thursday. The index is down 10.8% so far this year.
All large rate-sensitive banks such as JPMorgan Chase & Co. rose 1.8%, Bank of America Corp. 0.7%, Citigroup Inc. 1.7% and Goldman Sachs Group Inc. 2.3%.
Since hitting a two-month high in late March, markets have tumbled as the Fed indicated it would aggressively hike rates. This will require investors to revamp their portfolios. This year, financially-sensitive value stocks have outperformed tech-heavy growth stocks. These value shares often carry low rates.
“We are on the way to a long and meaningful period of value outperforming growth. It’s not just a cyclical adjustment, it’s a circular story,” said David Bahnsen of Bahnsen Group Calif. ,
The Russell 1000 Value Index rose 0.51% while the Russell 1000 Growth Index fell 1.09%.
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Large US banks, which begin their first-quarter register session next week, expect a sharp decline in earnings from a year ago. While they benefited from exceptionally strong dealmaking and trading.
Randy Frederick of the Schwab Center for Financial Research said “there’s always going to be a price at some point where people think things are cheap and they can afford them.”
He added that “perhaps the 52-week low was enough to lure some into the financial sector.”
The Dow Jones Industrial Average was up 137.55 points, or 0.4%, at 34,721.12, the S&P 500 fell 11.93 points, or 0.27%, to 4,488.28, and the Nasdaq Composite fell 186.30 points, or 1.34%, to 13,711.00.
The volume of shares on US exchanges stood at 10.37 billion.
Last week, the S&P dropped 1.16%, the Dow 0.28% and the Nasdaq 3.86%.
Shares of Tesla Inc, Nvidia Corp and Alphabet Inc fell between 1.9% and 4.5%. Megacap shares extended this week’s fall as Treasury yields jumped.
The NYSE FANG+ TM index, which includes Amazon.com Inc and Apple Inc, was down 1.76% and semiconductor stocks fell 2.42%, adding to the week’s fall.
The S&P 500 hit new 52-week highs and two stocks hit new lows. On the other hand, 53 stocks of the Nasdaq Composite set new highs and 184 shares set new lows.