“There has been a general rotation away from growth to other parts of the market over the last several weeks” — Paul Ebeling
Monday, inflation fears drove investors away from market-leading growth stocks in favor of cyclicals, which stand to benefit most as the economy reopens.
Industrial and healthcare shares limited the DJIA’s decline but the blue-chip average reversed course late in the session to cap a 3-day streak of record closing highs.
A demand resurgence is colliding with strained supply of basic materials, helping to drive inflation worries.
Once the supply lines are rebuilt this will go away. But it’s going to take some time.
The break-even rate on 5-yr and 10-yr US Treasury Inflation-Protected Securities (TIPS) touched their highest marks since Ys 2011 and 2013, respectively.
There’s still some Big Q’s as to whether the market believes inflation is transitory or something that will stick around.
Inflation concerns are in the minds of investors as the US Labor Department releases its latest CPI report Wednesday.
Q-1 reporting season has entered the home stretch, with 439 of the companies in the S&P 500 having reported as Friday. Of those, 87% have beaten consensus expectations, according to the data.
Analysts now see Y-Y S&P earnings growth of 50.4% on aggregate, more than 2X the rate forecast at the beginning of April and significantly better than the 16% Q-1 growth expected on January 1, per Refinitiv
Have a healthy day, Keep the Faith!