Major market averages traded mixed on Wednesday, with the Nasdaq down as the rotation out of mega-cap tech stocks continued.
Early and the Nasdaq Composite (COMP:IND) was -2.0%the S&P 500 (SP500) was -1.0%and the Dow (DJI) was +0.3%.
The yield on the 10-year Treasury bond (US10Y) rose 2 basis points to 4.18%. The 2-year yield (US2Y) rose 5 basis points to 4.46%.
The Russell 2000 small-cap index (RTY) also rose 3.5% on Tuesday.
“Rotation is the key word in financial markets right now as US market leadership has rapidly shifted from Mag-7 to the broader market,” Reid added.
Bloomberg reported this morning that “momentum trading has plummeted,” and that “the 40-day correlation between the Nasdaq Composite and the Russell 2000 is typically above 60%. It just hit 0.”
Market participants are looking to invest in sectors other than technology. This trend over the past week has seen traders move away from tech giants and into other areas such as defensive and value stocks and small-cap companies.
Traders will have some economic data to look forward to today.
June housing starts increased 3.0% MoM to 1.353 million versus consensus of 1.305 million and 1.314 million in May (revised from 1.277 million), while building permits increased 3.4% MoM to 1.446 million versus consensus of 1.395 million and 1.399 million previously (revised from 1.386 million).
Also expected later in the day are the Atlanta Fed's business inflation expectations and the Federal Reserve Beige Book.
