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Weekly Markets Update: Stocks End Flat with Healthcare Up and Consumer Cyclical Down
What to Know About the Tech Stock Selloff
How One Fund Has Beaten Its Peers Despite Not Investing in a Single Mag 7 Stock
A December Interest Rate Cut is Now a Coin Toss
Few Stocks at 52-Week Highs, Even as Market Hits Records
US Government Shutdown Ends, but Here’s Why the IPO Floodgates Likely Won’t Open
3 Takeaways from the Strong Q3 Earnings Season
Bitcoin Retreats to $100,000—What’s Next for the Crypto Market?
It’s been another curious, but not entirely surprising, week for the markets. After stabilizing early in the week, tech stocks resumed the prior week’s selloff after a strong bounce, and then stabilized again. Like a week ago, no particular news warranted a repricing of AI stocks. Somewhat amusingly, the idea was floated that the reopening of the US government means investors now have economic reports ahead of them, which is … apparently bearish for tech stocks? It also comes despite a generally strong earnings season. But as Sarah Hansen writes, the tech selloff is likely mostly about valuations and jitters about the growing pace of corporate borrowing being used to finance the AI buildout. Perhaps more importantly, it holds lessons about the risks of a concentrated stock market rally.
The story of how concentrated the stock market has become is an important one. Despite flashes of a broadening, or even a rotation to unloved sectors of the market (such as small-cap stocks over the summer), it’s been a tremendously lopsided market. Nine of the 10 largest stocks are within 10% of their 52-week highs (and are mostly hitting their all-time highs), but just 8% of small-cap stocks are at that level. Check out Bella Albrecht’s article for more stats on the unbalanced rally.
One fundamental shift in sentiment in the past week took place in the bond market, where traders have had a significant change of heart about the odds that the Federal Reserve will cut interest rates next month. As with stocks, no real news appeared to drive this shift, but the bond market now thinks the chances of a cut in December are a coin toss.
While few tears were likely shed for investment bankers over the government shutdown freezing the recently hot IPO market, that was one of its knock-on effects. Does the reopening of the government mean the floodgates will reopen this for IPOs year? Even as crypto pioneer Grayscale joins the ranks of companies lining up to go public, our colleagues at PitchBook explain why the window for IPOs is narrow.
Speaking of crypto, that tech stock selloff has been accompanied by a significant pullback in cryptocurrency prices. Bitcoin, for example, is down by double digits since the start of October. What’s driving the selloff, and will it continue? Valerio Baselli takes a look. Also check out Larry Swedroe’s deep dive into the debate over crypto vs. gold as safe havens for money.
Lastly, we profile a fund that has managed to beat its peers without owning a single Mag 7 stock. Amazing. Instead it’s chalked up top returns with stocks like Warner Music and Johnson & Johnson. Check it out here.
As always, be sure to visit our Markets page for our latest coverage and live stock market updates along with our full weekly calendar of key upcoming data and events.
