00:00 Speaker A
Bond yields continue to climb, putting pressure on equities. The Dow sliding more than 800 points. The S&P 500 and Nasdaq also ending the day lower. Yahoo finances, Josh Shafer joins us now with the trading day takeaways, Josh.
00:12 Josh Shafer
Yeah, Josh, it felt like we had a little bit of a mundane day of trading action. And then at 1:00 p.m., you had a bond auction get pretty weak demand. Yields took off and that gave us direction for the equity market, right? So here's sort of your 1:00 p.m. surge in that 10-year T-note, which finished up 11 basis points, 4.6%. That's your highest level since February. And then I'll flip over to the 30 year here, which is now at its highest level since 2023 and really approaching its highest level in more than a decade if it gets a little bit higher than here. But again, look at that move you saw at 1:00 p.m. and then I'll just flip to a major index here so you can see how stocks reacted. Let's get to the S&P 500. There's your 1:00 p.m. sell off. So, rising yields becoming a concern again for the stock market. Of course, that's something we were talking a lot going back to maybe January to start this year. It's been a on and off theme for the market this year.
00:59 Speaker A
And so those yields, it's not just the levels, it's also just the way we've gotten there. Why have they, why have we seen these moves? What are the reasons?
01:05 Josh Shafer
Yeah, so right now, you have sort of the US debt crisis in focus, right? That seems to be a hot topic right now. You also have had, though, inflation expectations have soared over the past month, right? That's something that could push yields higher. And generally speaking, you just have higher, it feels like we've shifted to a higher rate environment in the sense that no one's really calling for the Fed to cut right now, right? So if you just think about the rate picture overall, it is not nearly as dovish as it was going back a few months ago. But yes, with that debt crisis, I think you perhaps get as our friend, Eddie Jardin, would call it those bond vigilantes, right? Saying, well, if I'm worried about the US's ability to pay back debt, I want more of a return, right? I want a higher yield for that risk that I'm taking. So that's sort of what you're seeing. And I want to show you a chart, too, Josh. This is from Michael Kantrowitz over at Piper Sandler, just sort of laying out what moves in the 10-year can mean for stocks. So what we saw today is we moved above 45. Kantrowitz highlights that as an issue for rate sensitives and low quality stocks. I want to flip to what happened in the market today. So rate sensitive, low quality stocks, right? Let's look at the sector action today. Sector action today, let's see what fell the most. An extremely rate sensitive sector, right? Real estate. Then if you flipped over right at 1:00 p.m., again, right? Then if you flipped over one last thing I'll show you here, if we look at the leaders and we take a look at where is IWM for me. This is the Russell 2000, a lot of companies more exposed to debt in that sector. 1:00 p.m., big sell off. So that's sort of the areas in the market we're watching right now. If we get closer to maybe 5% on that 10-year, then you're starting to wonder about the whole market and if it's just going to weigh on the equity market as a whole.
03:05 Speaker A
All right. Takeaway number two, Josh, this is a simple one.
03:11 Josh Shafer
We had Bitcoin all time high today, right? So there's a lot of things that we're getting close to all time highs. Sort of discussion of, okay, what's going to get there first? Well, it was Bitcoin. Bitcoin crossed 119,500, I believe was our official number today right around here. Of course, it came back down with that equity market rally I've been talking about. But then if you just zoom out over the last month, it's been a pretty nice ride for the largest cryptocurrency in the world.
03:39 Speaker A
Yeah, so I spoke to Mike Novogratz of Galaxy recently and I asked Novogratz, listen, you look at gold market cap roughly 22 trillion. Will it be as big as gold? That's what Novo said.
03:50 Josh Shafer
That would mean that Bitcoin has a lot longer to run, Josh. Adoption snowball continues, yes.
03:57 Speaker A
All right. We will see. A final takeaway for us here. Stocks aren't all moving together. This was also in Kantrowitz from Piper Sandler's note and I thought this was interesting. So you heard a lot of talk when the terrors first came out, the whole market was moving together, right? So what we're looking at here is correlations within the S&P 500 and sort of how the stocks within the index are moving. When we got up to here, that meant that basically the whole market was moving together. That is not a common thing. And so what that does is it makes it hard to really own something and be protected, right? You just saw a lot of areas in the market where either getting whacked or everything was rallying together. Now we've fallen back down over the past month amid this rally and you're now perhaps in a more opportunistic point where different stocks are moving at different levels and you can maybe make choices as an investor.
04:41 Speaker B
So your point being, for the takeaway, the investor, the viewers watching this, stock picking could be back.
04:47 Josh Shafer
Yeah, stock picking could be back. And when you think about what's coming up in the next month and a half, two months, when we talk about all this economic data that people are waiting to see where the tariffs are impacting, where they aren't impacting. That's a chance to be a stock picker, right? Some companies are clearly seeing more impact from tariffs than others. Some companies would be more impacted if economic data slows. So strategies are sort of talking about how to position around that.
05:06 Speaker B
All right. We shall see. Thank you, Shafer.
