Volatility remains a growing concern on the street these days. We’ve returned to the days of large swings and big price drops – and the culprit continues to be rising bond yields. Investors have become cautious on the large-scale stimulus efforts proposed by the Biden administration and its possible effect on both inflation and borrowing costs for the United States. As a result, bond yields have continued to rise in recent weeks to hit levels not seen since the beginning of the pandemic. Traders have sold high-growth tech names and other market leaders while flocking to safe havens.
This week, the Fed continued to announce its support for higher inflation while boosting the economy. This again helped rising bond yields and put pressure on stocks.
The mixed earnings picture also contributed to the week’s sell-off. While earnings have generally been positive, investors continue to be concerned about guidance figures and the reopening of the economy. Economic data on the week was a bright spot with several key pieces of employment, consumer and manufacturing data all coming in positively.
All in all, despite pockets of good news, traders sold stocks on the rising bond yields and sent the market lower on the week.
Be sure to check out our previous Wrap here, when a more volatility gripped the street.
