By Barbara Kollmeyer, MarketWatch
Tech investors might want to grab onto the nearest railing.
Confirmation that the Feds have opened an antitrust probe into Amazon /zigman2/quotes/210331248/composite AMZN -0.64% , Google parent Alphabet /zigman2/quotes/202490156/composite GOOGL -2.18% , Apple /zigman2/quotes/202934861/composite AAPL -1.44% and Facebook /zigman2/quotes/205064656/composite FB -2.53% is knocking those popular names, and setting Wall Street up for a bumpy ride Wednesday. Note Facebook results are due after the close, with Amazon reporting Thursday.
It’s been a big year for growth stocks — newer companies that offer the chance for big gains, but with elevated risk — with many big tech names falling into that category. The Nasdaq, which houses a bunch of them, has soared 24% year to date, just ahead of a 20% return for the S&P 500.
Less popular have been value stocks, comprised of more traditional companies such as banks and conglomerates, which offer slower and steady returns, but require more patience. They also offer dividends and our call of the day from Federated Investors’s chief equity market strategist Philip Orlando, says it’s high time investors wake up to that benefit.
”You’ve got a benchmark U.S. Treasury yield at 2%. I can give you a high-quality U.S.-based dividend-oriented portfolio that will give you a 4% dividend yield right now, twice what you can get in Treasurys,” Orlando told MarketWatch in a recent interview.
Value stocks have indeed been underperforming, amid growth-stock fever. “The swing of that is that if [value stock] prices are down or lagging, that means their yields are going to be elevated.
And for those investors who are putting their money in Treasury bonds, and getting that 2% yield, if the economy starts to strengthen, those yields will go up and that will hit prices. But for equity prices, a stronger economy will be a positive for corporate earnings.
“So for investors who need yield, we would actually suggest that dividend-paying stocks are the new bonds, given how low Treasury bonds are right now,” he said. There’s more on the overly milked Treasury cow below in our chart of the day.
Gold is off, oil is up and the euro is down against the dollar ahead of Thursday’s ECB meeting, which could lay the groundwork for a rate cut.