Stocks Retreat as Treasury Yields Jump03/01/2021

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February 22 - 26, 2021 Recap

Technology Stocks Lead Sell-Off
All major stock market indices retreated last week. Bond investors are starting to get anxious about the prospects of future growth, demanding more yield on their bonds. This drove down stocks and especially technology stocks. Generally, technology stocks are more impacted by bond yields because they tend to have higher stock price valuations that are calculated based on projected future earnings. Technology stock valuations have been lofty in this low yield environment, hitting levels not seen since the dotcom bubble. Other factors for the selloff are profit taking and a rotation into stocks that may do well in the next phase of the recovery as the economic recovery broadens away from just large growth companies. Large cap value outperformed large cap growth by 6% in February, which is the widest margin of monthly value outperformance since 2001.

Weekly Performance
For the week, the S&P 500 fell 2.41%, the Dow Industrials dropped 1.70%, and the tech-heavy Nasdaq Composite gave back 4.90%. The small cap-focused Russell 2000 retreated 2.87%.

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The Weekly Recap is published by Cetera Investment Management LLC, an SEC registered adviser owned by Cetera Financial Group. Cetera Investment Management provides market perspectives, portfolio guidance, model management, and other investment advice to its affiliated broker-dealers, dually registered broker-dealers and registered investment advisers.

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