Nasdaq Keeps Inching Higher; 10-Year Yield Now 1.73%

Markets were mixed-to-down for the first trading day after our three-day weekend: the Dow closed down -0.76%, -267 points — now essentially flat from a month ago. The Nasdaq, on the other hand, gained another +0.07%, which is enough for a new all-time closing high. The S&P 500 split the difference, down  -0.34% on the day. The small-cap Russell 2000 fell another -0.72%.
These are miniscule new highs being set on the Nasdaq, but they still count. And for at least the second day, Nasdaq’s intra-day highs have been even higher than the closes. Though there is a bit of trepidation in the market to start historically challenging September, but the growth plays are winning out. Netflix NFLX gained +2.7% today, and although Tech was flat overall, Apple AAPL enjoyed +1.5% gains.
For basically all of 2021, it’s been a growth-vs.-cyclicals story. It’s also been a good way for the market to self-regulate: bidding up tech and other growth areas would eventually ebb and give back to value names. The Dow has not seen a new closing high since mid-August, but perhaps if this trend continues we’ll see industrials, etc. that haven’t gotten the love suddenly back in favor?
This would likely follow the data points, especially in terms of supply constraints here in the latter half of the year. The Fed has famously been betting on transitory supply constraints, leading to “transitory” inflation, but an increasing number of analysts are seeing supply headwinds continue and costs not retreating accordingly. If this happens, we’ll start to hear more about the dreaded “stagflation” issue in the market.
It may be this is a reason for the 10-year bond yield creeping up of late. It’s 1.37% currently, up notably in the past month and the highest since mid-July. That said, we’re still at historically low yields on the 10-year; there’s no real damage to foretell, it’s more a matter of gauging a change in the weather in regard to bond rates. The questions remain: Will inflation stick around? and What if Growth doesn’t stay hot?
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