Investors are gravitating toward big technology stocks as banking crisis worries rock U.S. markets, hoping the shares are better positioned to withstand a possible economic downturn and will benefit from a steep drop in bond yields.
With investors “starting to price in solvency risk or the potential of companies needing capital, the market is rewarding those that don’t need capital to survive,” he said. The S&P 500 was down 1.6% on Wednesday afternoon, having nearly erased its year-to-date gain as financial stability concerns spread to Europe, hammering the shares of embattled Credit Suisse and other lenders.
That move has reversed dramatically in recent days amid extreme volatility in the bond market. Yields on two-year U.S. Treasuries on Wednesday fell to their lowest since September.