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Wall Street closes February with significant gains despite bond yields

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Wall street has closed mixed after the Nasdaq will collapse this Thursday more than 3%, Due to the rise in bond yield, which caused a large correction in the values ​​associated with the technology. Despite the sharp falls in recent days, the balance for February is positive. The Dow Jones has advanced about 4%, the S&P 500 slightly more than 3% and the Nasdaq has made it 1.5%

Investors continue to monitor the behavior of the sovereign debt. The performance of the 10-year American bond It shot up to 1.61%, one of its biggest daily increases in recent years, due to the poor result of an auction carried out by the Treasury.

And although it subsequently relaxed and is now trading at 1.47%, that movement was enough to stress markets, whose valuation is very demanding and is close to all-time highs. Thus, any event indicating financial stress is being greeted with a lot of nerves by traders. Something, normal, on the other hand, after the last rises registered by the New York Stock Exchange.

THE RISE OF YIELDS AND ITS IMPACT ON STOCK EXCHANGES

In this way, Russ Mold, director of investments at AJ Bell, comments that the rise in the profitability of public debt, not only in the US but throughout the developed world, has three negative consequences for equities.

For one thing, rising bond yields "mean that fixed income offers a more attractive alternative for profitability seekers, which shift their asset allocation from stocks to bonds. "

Secondly, "rising interest costs affect corporate profits", which in turn makes stock market valuations more demanding.

And thirdly, the rise in yields on public debt "drives the discount rate analysts use in their discounted cash flow models (DCFs). "Thus," the higher the rate at which future cash flows are discounted to their net present value (NPV), the lower the value of the share. "

Russ Mold adds that "this is a particularly serious problem for companies with better future forecasts, because the investment now discounts higher earnings and cash flow in the future "; and affects"technology stocks and biotechnology stocks"This analysis explains that sales in these sectors are more important when bond yields rise, as has happened in recent days.

ECONOMY AND BUSINESS

On the economic agenda, the consumer confidence indicator for February, prepared by the University of Michigan, has risen slightly to 76.8 from 76.2, compared to the expected 76.5.

At the corporate level, the SEC, the US regulator for exchanges, re-investigate Elon Musk, founder of Tesla, this time for the tweets about Dogecoin.

TECHNICAL ANALYSIS AND OTHER MARKETS

By technical analysis, "what we have before us in the Nasdaq is a potential 'head and shoulders' which would be confirmed by closing below the support it has at the lows of this Tuesday, in the 12,758 points", says José María Rodríguez, an analyst at Bolsamanía.

"If it ends up being confirmed, we can bet on a rapid movement towards the support zone of approximately 11,750 points, which is where the straight support that joins each and every one of the successive lows that has risen since last summer passes, "adds this expert.

In other markets, oil West texas fell 0.6% to $ 63.13, while the euro it depreciates 0.45% and changes to $ 1.2121. In addition, the bitcoin drops 4%, up to $ 46,835; and the ounce of gold down 0.7% to $ 1,762.

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