Why has the stock market gone nowhere? Tesla and growth have shattered.

Text size

Stocks were mixed on Wednesday but did not move much. The market has had quite a run and many stocks are taking a breather.

The

Dow Jones Industrial Average

rose 16.02 points, or 0.05%, to close at 33,446.26, after spending much of the day in the red. The

S&P 500

6.01 points, or 0.15%, added to end at 4,077.95, while the

Nasdaq Compound

fell 9.54 points, or 0.07%, to close at 13,688.84. The biggest gain in the S&P 500 was

L Brand

(ticker: LB), the parent of Victoria’s Secret, which raised shares by 3.7% with an analyst upgrade.

Meanwhile, ultra-growth stocks have hammered.

Tesla

(TSLA)’s shares are still in a bear market after setting a record in January; the giant’s shares for electric vehicles fell 3% on Wednesday. Shares of giant for video conferencing

Zoom video communication

(ZM), with more than 40% lower than a peak in October, fell by another 2%. The rise in interest rates with longer dates leads to deviation from these stocks because the companies expect the bulk of their profits in the long run, and their current valuations are vulnerable to higher rates.

However, shares of more mature growth companies performed well.

appeal

(AAPL),

Facebook

(FB), and

Alphabet

(GOOGL) increased by 1.3%, 2.3% and 1.3% respectively. The

Nasdaq 100,

an index that includes technology stocks with large capitalization rose 0.28%.

Stocks hold a lot of good news as fiscal stimulus and reopening move the economy. Over the past 30 days, including Wednesday’s performance, the Dow and S&P 500 have risen 5% and more than 6% respectively. The valuation of shares is rich, while interest rates have risen, reducing the attractiveness of shares versus bonds. And the rally has lifted many sectors – meaning stocks have a downside; According to Canaccord Genuity data, 86% of the S&P 500 shares traded above their 50-day moving averages on Tuesday. The weakness Wednesday was almost as wide as the market rise; According to FactSet data, 61% of the S&P 500 shares fell.

It all comes in the absence of significant developments or changes in the economic outlook. Trillions of dollars of fiscal stimulus are already in circulation. President Joe Biden’s $ 2 trillion plus infrastructure plan does not contain many positive surprises. The Federal Reserve commented on Tuesday afternoon, but did not release anything new. The earnings quarter in the first quarter has not yet begun, although investors will be focused on the bottom rules and guidelines when companies start reporting.

As for the Fed, equities have not even responded to the central bank’s largely positive messages, indicating that it is far from cheap. The Fed did not soon hint at higher interest rates. “There appears to be no hidden interest in higher rates, indicating that interest rates will indeed remain low until unemployment falls to pre-pandemic levels,” Commonwealth Financial Network chief investment officer Brad McMillan said by e-mail mail written to the press. Even with the background, stocks could not pull much on the day.

“Investors may have their sights set on what the next catalyst will be to move stocks, as the market has pretty much leveled off this week – which is not bad as we are at a record high,” said Mike Loewengart, managing director of investment strategy at E * Trade, wrote in an email.

Write to Jacob Sonenshine by [email protected]