Futures mixed as tech shares dip, treasury yields jump

Yahoo Finance’s Julie Hyman, Myles Udland, and Brian Sozzi discuss moves in the treasury yields and big tech stocks.

Video Transcript

JULIE HYMAN: I'm excited about this conversation. We're talking about what's going on in the markets here today, in the context of what has been happening over the past couple of weeks. As I mentioned, the NASDAQ down for the third straight week last week, and we have continued to see the sell off in tech. It is abating a little bit this morning.

But when you look at the depth of some of the losses, in particular names last week that we were watching, names like Peloton, and Okta, and Zoom that were selling off, as we continue to see this rotation out of some of these tech high flyers during the pandemic and into the so-called reopening trad, right, we saw financials do well. We've seen energy stocks, as well as underlying energy prices, do well. So it's been a really interesting phenomenon over the past couple of weeks.

And Myles, in particular, you have been looking, as many people have, right, at the ARK funds as the sort of poster child, if you will, for what we saw during the pandemic, and then that really turbulent, at times painful for some of the holders, rotation out of it in the last couple of weeks.

MYLES UDLAND: Yeah, I think it sort of makes sense that we are going to be looking at an ETF or that we would look at an ETF as a source of kind of upset within the market, if we want to think about it that way. ETFs have obviously exploded in popularity. There are [INAUDIBLE] more ETFs now than there are stocks.

And I think the way that the underlying components within ARK have been targeted and focused on and, yes, they all do happen to fit that theme of maybe not benefiting quite as much if the economy gets back to normal has seen a lot of the focus go to that suite of funds. And certainly, part of this is also related to Cathie Wood's star having risen so much over the last six months, as people kind of looked around and said, whoa, Cathie Wood has absolutely destroyed the markets in the last couple of years. That AUM in ARK has gone from just a couple of billion under management to, I believe, $60 billion was the high-water mark. And so a 20x increase in how much money the ARK funds are managing, certainly going to draw attention as well.

But I think this dynamic continues to-- to be of interest within the market just because it-- not only are we seeing tech continue to cool off and this theme pretty much every day, what's good for America is probably bad for some of the stock market darlings. So it's happening now, but also it makes us realize that for the last several months, really from November until February, when the S&P and the Russell specifically, bank stock, industrials, were all high flying over that period. A lot of the big tech names, maybe they weren't outright down, but they were certainly lagging. It was basically churn in place for a while.

And I know we talked to Jared Blikre about a more technical setup within the market. Things can correct a couple of ways, either through time or through price. We had a time-based correction for a lot of these names that did not participate in the post-election rally. And now we are seeing a price correction come in as well. And I think it's going to be, or has been, painful for a lot of folks. And you know, Sozzi, I don't think, though, any of this stuff in the stock market is inconsistent with what we continue to see once again in our inboxes this morning, which is increased bullishness from economists on where the real economy is heading over the second half of this year.

BRIAN SOZZI: Yeah, Myles, I'm glad you brought that up because, you know, on one hand the economists I think remain very, very bullish. You had Goldman Sachs out this morning calling for a job market boom, looking for the unemployment rate to hit about 4.1% this year, going down to 3.4% next year. And within that, they're still looking for an S&P 500-- the S&P 500 hitting 4,300 this year. But I think it's very important to distinguish right now fundamentals and what we're seeing just in terms of price action and a lot of this bearish activity in the NASDAQ.

I continue to watch the electric vehicle space. This space has led us, or led the NASDAQ, into some of these steep sell-offs here. You look at Xpeng, they reported earnings this morning here. The stock was down 35% year-to-date coming into that earnings report. NIO down 21%. Li Auto down 22%. And so the market is-- has taken profits on these stocks, primarily under valuation concerns.

Now, I caught up with Xpeng's vice chairman this morning, following their latest earnings release. He says, Brian, we're seeing, quote, "big momentum, big momentum into March." So at least the fundamentals of the electric vehicle space, and I would say, of course, the tech space more broadly, have not changed. This just remains a very PE multiple-driven sell off in these stocks, Julie.

JULIE HYMAN: And I also wanted to mention, Brian, something that you actually brought up in our meeting this morning is that we are seeing sort of a spreading of what's going on in big cap tech here or maybe synchronous declines in risk assets across the globe, because the CSI 300, which is the Chinese benchmark, has just entered a correction as well. It fell 3 and 1/2%. It went down through its 100-day moving average. So that's something that we continue to watch as well.

And of course, bound up in all of this, the other side of the coin as well, to what we're seeing in stocks is what's happening in bonds. And that's really been what has been a driving factor for what's been going on in stocks, as we continue to see the yield on the 10-year not elevated, certainly by historical standards, but elevated by what we have been seeing over the past several years. That 10-year yield rose last week for the sixth straight week. And even though we are starting to get some investors, most notably David Tepper this morning talking about perhaps some stability happening in the 10-year, we'll see if that is, in fact, the case if that economic data continues.