Bloomberg: ‘Mag Seven’ Rally as Nvidia’s Winning Run Hits 14%: Markets Wrap

October 7, 2024

The stock market rebounded strongly, led by technology companies and chipmakers, after a recent dip. The S&P 500 closed up 1%, with major indices nearing all-time highs.

While the tech sector continued its upward momentum, broader market sectors such as industrials and financials also showed strength. Treasury yields remained stable after a brief rise, easing concerns over potential Federal Reserve rate cuts.

The volatility index (VIX) dropped, indicating lower market anxiety as traders digested comments from U.S. policymakers about the future of interest rates.

Michael Landsberg, Chief Investment Officer at Landsberg Bennett Private Wealth Management, weighed in on the bond market, offering insights into yield movements and their potential impact on stocks.

Key Takeaways:

  1. Market Rebound and Broader Participation: The stock market recovered, driven by gains in key sectors like technology, industrials, and financials. The broad-based performance signaled that investor confidence is returning, pushing major indices closer to their all-time highs. The overall market strength extended beyond just one sector, reflecting more balanced participation.
  2. Treasury Yields and Fed Policy Impact: Treasury yields remained stable after a recent climb, with the 10-year yield holding above 4%. Michael Landsberg commented that “yields will likely stay range bound and even if they rise from here, they have plenty of upside room before rising yields start to negatively affect stock prices.” His analysis suggests that even as yields rise, the stock market has room to grow without being immediately pressured by higher rates. This perspective aligns with the broader sentiment that fewer rate cuts may be expected, but equities remain well-positioned for now.
  3. Fed Policy Commentary and Reduced Volatility: Remarks from U.S. Federal Reserve officials indicated a cautious, data-driven approach to potential rate cuts. While there are signs that inflation risks have diminished, concerns about the labor market persist. This balanced approach reassured investors, contributing to the drop in volatility as measured by the VIX.
  4. Bond Market Adjustments: Landsberg noted that the bond market seems to be factoring in fewer rate cuts based on the recent yield movements. This adjustment reflects a view that while economic data is closely watched, there is less urgency for immediate or drastic Federal Reserve action. Landsberg’s commentary highlights that the bond market is providing room for equities to perform well without being overly affected by rising yields.
  5. Corporate and Economic Developments: The broader market remained responsive to economic indicators and updates from major industries. Energy prices, however, faced downward pressure alongside a dip in oil prices. Investors continue to weigh the impact of inflation, labor market risks, and global economic uncertainty as they consider the outlook for different sectors.
  6. Volatility and Economic Outlook: While the market responded positively to economic data, some sectors encountered challenges. Investors and analysts are closely monitoring Federal Reserve actions as mixed macroeconomic indicators, such as inflation and labor market performance, influence the outlook for future rate cuts.

Landsberg’s insights emphasize that the current environment of rising bond yields is not yet a major risk for stocks, particularly as market leadership broadens across various sectors. His observation that yields could rise without immediately impacting stock prices provides a cautiously optimistic outlook for investors navigating ongoing uncertainty in the bond and equity markets.

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