In a rare turn of events markets, particularly tech stocks, had a pretty big dud of a day.
As you can see above, the Nasdaq really lagged everything today, with FAANG stocks leading the drop and dragging the index down with them.
The government starting to investigate these companies from an antitrust perspective surely did not help them, given that a contributing factor to their performance over the last decade has been their hegemonic market positions and ability to muscle out any competitors.
In line with the underperformance of FAANG stocks, we had a rare day where Small Cap, Value and Low Volatility factors excelled compared to the S&P. Like I mention often when discussing factor performance, days like these are aberrations from the longer trend we have been seeing of Growth and Momentum outperforming every other factor.
Over the past five years, Growth has outperformed Value by over 60%, and the same holds true for Large Growth vs Small Caps.
Whether we will see these factors find some performance parity is one of the key questions when thinking about equity investing over the next five – ten years. Will a changing / recovering economy shift the complexion of equity factor returns in a meaningful way?
Fixed income markets were pretty subdued today with little to write home about. The longer term story has been the recovery of High Yield Bonds, where performance is getting close to positive for the year.
Other, more standard fixed income products have been enjoying respectable performance for the year; especially if you went out and bought long term bonds early in the year :).
Economic data today was led by Initial Jobless Claims, which cam in at 1.42 Million. The latest release means that the streak that began in mid March, of weeks with more than 1 Million claims, remains intact, a dubious and concerning trend to be sure.
On the earnings front, Twitter impressed investors while Intel really, really did not… dropping over 11% after hours.
Tomorrow is a slower earnings day, as Fridays are, but we get to see Verizon, American Express, and Honeywell.
Sometimes Finance Links
Private equity ain’t all that great
Coyotes on the National Mall
TikTok is awash with horrible financial advice
US evictions are about to spike
On climate change and mass migration
Till tomorrow,
Nathan