Wall Street bets on high-yielding cash deals in fresh blow to stocks

“Stocks are more expensive than cash,” Ed Clissold, chief U.S. strategist at Ned Davis Research Inc., said on Bloomberg Television’s The Close. “You really have to try to find companies that will grow quickly to justify owning a risky asset like stocks instead of just sitting in cash and collecting a risk-free 5.5 per cent.”

While still sitting on double-digit year-to-date gains, that logic has dragged the S&P 500 five per cent lower so far in September, putting the index on track for its worst monthly performance of 2023. Pain intensified last week, when Fed chair Jerome Powell signalled that the central bank will keep policy restrictive “for some time” to push theback to the central bank’s target of two per cent, keeping borrowing costs high in the process.

“If I can earn, say, 5.5 per cent in a risk-free investment, particularly if I believe that there’s going to be a lot of volatility in the stock market, heck yeah, absolutely,” David Spika, president and chief investment officer of GuideStone Capital Management LLC, said. “The good news is there are options for investors — you don’t have to take the risk of the equity market — you can benefit from the yields we’re seeing in fixed income and money markets.

While higher rates are boosting the allure of cash, they’re one of the biggest concerns plaguing stock bulls at the moment. Funding costs are growing increasingly expensive as inflation-adjusted yields hover near decade-highs, threatening to pressure companies big and small. That’s feeding into concerns over tech shares because their long-term earnings prospects now have to be discounted at higher rates.

Given that backdrop, hedge funds are ramping up their bets against stocks, driving net leverage to the lowest levels since the depths of the pandemic. Meanwhile, a Goldman Sachs Group Inc. basket of the most-shorted stocks is down more than 11 per cent this month, handing bears a handsome profit.

Canada Canada Latest News, Canada Canada Headlines

Similar News:You can also read news stories similar to this one that we have collected from other news sources.

Stock market today: Wall Street opens lower, a day after a rare gainNEW YORK (AP) — Wall Street is back to falling on Tuesday, even as pressure from the bond market relaxes a bit. The S&P 500 was 0.7% lower in early trading, coming off a rare gain and on track for its fifth drop in six days.
Source: SooToday - 🏆 8. / 85 Read more »

Wall Street Bets on High-Yielding Cash Deals in Fresh Blow to StocksThe stock market is buckling under the weight of a simple equation: cash earns more than equities.
Source: BNNBloomberg - 🏆 83. / 50 Read more »

Stock market today: Wall Street drops as its September slump gets even worseNEW YORK (AP) — Wall Street’s September swoon accelerated, knocking stocks down to their lowest levels since June. The S&P 500 fell 1.5% Tuesday, its fifth drop in six days. The Dow lost 388 points and the Nasdaq composite gave back 1.6%.
Source: SooToday - 🏆 8. / 85 Read more »

Stock market today: Asian shares mostly lower after Wall Street retreat deepensTOKYO (AP) — Shares in Asia were mostly higher on Wednesday, shrugging off a sharp decline on Wall Street that took benchmarks back to where they were in June. Tokyo's Nikkei 225 recovered earlier losses, gaining 0.3% to 32,371.90. In Hong Kong, the Hang Seng advanced 0.6% to 17,577.03. The Shanghai Composite index added 0.3% to 3,111.36. In China, concerns continued over heavily indebted real estate developer Evergrande. The property market crisis there is dragging on China’s economic growth an
Source: YahooFinanceCA - 🏆 47. / 63 Read more »

Wall Street bets on high-yielding cash deals in fresh blow to stocksThe stock market is buckling under the weight of a simple equation: cash earns more than equities. Read more.
Source: fpinvesting - 🏆 43. / 63 Read more »