The rotation away from large Nasdaq stocks like Tesla has intensified, resulting in the market’s biggest divergence since the dotcom bubble broke a generation ago.
The SPDR Industrial ETF (XLI) set a new all-time closing high on Friday, while the SPDR Technology ETF (XLK) slid for a third straight week. The divergence follows a new trend of investors shifting toward value stocks that can withstand higher interest rates. They’re also looking for companies that can benefit from faster gross domestic product.
The S&P 500 plunged 3.3 percent between Friday, January 22, and Friday, January 29. It was the biggest weekly decline since October, with 85 percent of the index’s members losing value. The selloff also dragged stocks into negative territory on a year-to-date basis.
The DJ Automobile Manufacturers Index ($DJUSAU) has gained 88 percent in the last three months. That’s the biggest gain of more than 150 industry indexes on the TradeStation platform. The Auto Part Index ($DJUSAP) was the second-best performer, up 78 percent. In contrast, the broader S&P 500 has risen 12 percent in the same period.
The S&P 500 slid 1.5 percent between Friday, January 8, and Friday, January 15. It was the index’s sharpest decline since the week ended October 30. The Nasdaq-100 slid 2.3 percent, while the Russell 2000 rallied 1.5 percent. That divergence between big and small has been typical lately as money shifts to value stocks and newer companies.
The S&P 500 rose 1.8 percent between Thursday, December 31, and Friday, January 8. It was the biggest weekly gain since late November. planting the index above 3,800 for the first time ever. The Nasdaq-100, Russell 2000 and Dow Jones Industrial Average also hit new records.
ADP’s private-sector payrolls report on Wednesday and the Labor Department’s non-farms payrolls report on Friday both missed estimates. They were also negative — showing actual job losses — for the first time in at least six months.
Yesterday the Institute for Supply Management’s manufacturing index spiked to its highest level in more than two years as new orders surged. That was a big improvement from the previous month, when coronavirus safety measures delayed work and kept employees at home.