Tech stocks diverging from rates following Fed signals
Yahoo Finance’s Jared Blikre breaks down how markets opened on Tuesday.
BRAD SMITH: Welcome back to "Yahoo Finance Live" this morning. Taking a look at the major averages across the board, we are seeing red. Let's get a little bit more insight and context on what's taking place early in today's tape. We've got Yahoo Finance's Jared Baker standing by. Jared.
JARED BLIKRE: Hey there, Brad. Looks like we've got another down day. Well, it's only early, and it's only down. It looks like the NASDAQ down about a quarter of a percent.
But let me just show you what's happened over the last three days. I want to show some of these squiggles that happened yesterday. That was the Powell testimony, erring on a little bit of a dovish side, then the hawkish side, then a dovish close. Hard to say what's really going on there, but I think Powell's message that we could have a higher terminal rate, this could have repercussions for the market.
So I just want to outline where we are with the 10-year T-note yield, and then I'll come to a couple conclusions here. This little downdraft here probing lower levels to what, 3.3% or so, that happened on Fed day last Wednesday, and it's been up ever since. And this is usually concurrent with a drop in tech stocks. Growth stocks don't like these higher interest rates.
And then you take a look at what's happening with the 13-week T-bill rate. This is very close in terms of duration to what the Fed is doing with its benchmark interest rate. This is bumping up against that one-month high there that we've seen-- that we've been seeing since late last year.
And Powell yesterday, he said we might have a higher terminal rate. You'll notice that this is about 4.57%. That could be 5%. It could be 5 and 1/2%. If that happens, probably going to be concurrent with lower stock prices, especially lower tech prices, but we haven't seen that yet.
US dollar has also strengthened. A little bit down today, almost break even, so not much to read there on that front today.
But let's take a look at what's happened in the market. This is what's happened today. Tech, energy, materials outperforming. Here's what's happened this week. Energy, tech-- well, we just said that. That Is still in the lead. Financials also outperforming.
But let me show you what's happening with the leaders here. Software, chip stocks, momentum, defense, all of those outperforming. We've got some nice tech earnings.
My point is there is a growing disconnect with what's happening with tech stocks and interest rate, and there's probably going to be that moment that they have to converge or come back to reality. So that could happen in either direction. Rates could catch up to stocks, or stocks could catch down to rates. That's about it, guys.