The S&P 500’s big jump amid last week’s “epic rallies” for stocks and bonds was driven in part by interest-rate-sensitive sectors that broadened the breadth of the index’s gains, putting it on course for a rally into year-end, according to Yardeni Research.
“The plunge in the bond yield boosted the valuation multiples of technology stocks as well as the more traditional interest-rate sensitive ones,” the Yardeni analysts said of last week’s rally. The U.S. stock market’s broad jump last week led the S&P 500 SPX, Dow Jones Industrial Average DJIA and Nasdaq Composite COMP to a strong start to November, after the indexes slumped in the previous three consecutive months.
Last week’s “epic” bond-market rally carried the 10-year Treasury note yield “down to a more comfortable distance from 5.00%,” the Yardeni analysts wrote. They said the move was “fueled by modestly bullish economic news that seems to have triggered a massive short-covering rally by the bears and a buying panic by the bulls.”
Big Tech in 2023 Meanwhile, the S&P 500’s best-performing sectors so far in 2023 are communication services, tech and consumer discretionary, each with huge double-digit gains.