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 (NAS:AMZN) , Google parent Alphabet (NAS:GOOGL) , Apple (NAS:AAPL) and Facebook (NAS:FB) 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.
The Nasdaq (AMERICAN:COMP) , Dow and S&P 500are lower as trading gets underway.
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.
Watch out for comments from new U.K. Prime Minister Boris Johnson, who could trigger action for the FTSE 100 and the pound.
Disappointing results are hitting shares of machinery giant Caterpillar (NYS:CAT) and Boeing (NYS:BA) . Better earnings news is lifting medical device maker Boston Scientific (NYS:BSX) and package shipper UPS (NYS:UPS) . Tesla (NAS:TSLA) , Ford (NYS:F) and PayPal (NAS:PYPL) will report late, alongside Facebook.
Earnings Watch: Facebook’s fine, Boeing’s bind and Tesla’s bottom line
Treasury Secretary Steven Mnuchin will hit CNBC early to discuss the latest on trade talks with China, due to restart next week.
The Markit manufacturing and services purchasing managers indexes will be released after the open, followed by new home sales.
Democrats are hoping Wednesday’s long-awaited testimony by former special counsel Robert Mueller will dent President Trump’s re-election bid. See Live Blog
Bank of America Merrill Lynch recently referred to bond inflows as “staggering”, with a record $455 billion pouring into the asset class so far this year. That’s as investors bet on lower yields, meaning higher prices, better returns. But our chart of the day says the ship may have sailed on that asset.
It comes from The Atlas Investor’s Tiho Brkan, via the below tweet, which shows the level of bond bullishness right now. For a contrarian investor, he says that may be a red flag:
U.S.-born teen released after being held by immigration officials for three weeks
And neighbors form a human chain to stop another detention
#Ididn’twanttodie — Russian hashtag (translated) at the front of the country’s fight against domestic abuse
Bison charge, hurls 9-year old into the air at Yellowstone
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