Wall Street’s resilience to the idea that higher interest rates will hit stocks has led to the most dramatic rebound in the US rate outlook in decades.
In particular, sectors most sensitive to higher borrowing costs — technology, Nasdaq and growth stocks — have outpaced rising bond yields amid rising default rates and Federal Reserve expectations.
For example, the correlation between the Nasdaq and US bond yields has been negative for the past two years. But that has completely changed, and the correlation of the Nasdaq 25-day simple moving average with US two-year and 10-year yields is now more positive since last April.
The latest retail sales statistics show that the US economy is performing better than most expected. The recession that people thought would happen hasn’t arrived, and people wonder if it will.
Earnings expectations for S&P 500 companies have fallen to zero this year, which Miran believes could pick up if growth stalls. And next year, consensus forecasts now call for earnings growth of nearly 12.5%.
Market positioning is also a factor. Investor exposure to US stocks at the start of the year was very low, and fund managers underpriced US stocks for the most part since 2005.
JP Morgan’s Marko Kolanovic estimates that the two-year performance since the Fed meeting should see the Nasdaq sell off between 5.3% and 10.5%, which is up 3.52% since then.
Most Adani Group shares rose
Most of Adan Group’s shares rose in early trading as the conglomerate sought to garner investor loyalty after a spate of short sellers wiped out billions of dollars in investor wealth.
Adan Green Energy has a refinancing plan that the company will release after the end of the fiscal year; an Adan Group executive told bondholders in a call on Thursday.
Shares of Adan Green rose 3.4% on Friday after losing nearly 71% following a January 24 report by US short seller Hindenburg Research. Adán Energía grew by 5.3%, and Adán Puertos and the Special Economic Zone a little more.
The conglomerate’s seven publicly traded companies have collectively lost about $125 billion in market value after Hindenburg alleged the group misused offshore tax havens, manipulated shares and raised concerns about their high profits. debt levels.
Adan Green Energy’s bonds due 2024 and offering a coupon of 4.374% rose to 84.6 cents on the dollar Thursday from 74 cents the day before.
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