Stock Market’s Bogeyman
By Thu, Mar 4, 2021
Hey Scoopers,
Another rise in the 10-year Treasury rate dragged the market. — More on that in the “Overall Market” section.
Beyond the overall market, one specialty retailer made a surprising announcement that cheered up its investors. Simultaneously, a COVID-19 antibody treatment developer faced a sell-off after also making a surprising announcement. — More on that in the “What’s Up?” and “What’s Down?” sections.
By the way, who is the new stock market bogeyman? — More on that in the “Water Cooler” section.
But, first, here is a recap of what happened in the market yesterday:
Market Recap
- U.S. markets: All the indices ended Wednesday in the red. Scroll down to the “Overall Market” section to read more.
- Cryptocurrency: Bitcoin price crawled back to above the $50K threshold.
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High Bond Yields are not Going Away
The stock market closed Wednesday in the red zone. The Dow Jones index started the day upward but ended it close to the flat line. Meanwhile, the technology sector again witnessed a sell-off, extending last week’s losses. The investors’ bearish sentiment towards the stock market has reappeared after the 10-Year Treasury bond yield almost surpassed the 1.5% once again, leading to a plunge in the indices for the second session in a row.
A Good Surprising Announcement
So, what happened?
Shares of Michaels Companies Inc (Ticker: MIK) were up by more than 22% on Wednesday. Michaels Co is an arts and crafts specialty retailer in North America. The spike came after a surprising statement from Michaels Co and Apollo Global Management (Ticker: APO) announcing that both companies have converged to a Definitive Agreement, where Apolo will be acquiring Michaels Companies in a transaction valued at $5 Billion, with a $22 purchase price per share.
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A Bad Surprise Announcement
So what happened?
Shares of Vir Biotechnology Inc (Ticker: VIR) were down by more than 27% on Wednesday. Vir is one of the companies in the run to develop a COVID-19 antibody treatment. The plunge came after DSMB raised concerns that Vir’s treatment developed in partnership with GlaxoSmithKline (Ticker: GSK) may not be very effective. It frustrated investors who were expecting the experimental medicine to be authorized for the next phase of testing. After the announcement, investors turned bearish and started to sell off Vir’s stocks.
Stock Market’s Boogeyman
So what happened?
As we have recently seen, the stock market has experienced weekly losses since mid-February. The markets have been concerned with the constant ups and downs of the 10-Year Treasury rate. Although some analysts expected the issue to be over on Monday when the indices strongly recovered, the returning rise in the bond’s yields has pushed the markets down to the point of almost squaring 2021 gains. The Treasury Yield has become the market’s bogeyman.
Along with the declines in the number of cases of infections and hospitalizations, the $1.9 trillion COVID-19 relief package is turning the investors confident about a sharp rebound in consumer demand. To protect their investments against the most recent stock market’s bogeyman, investors have pulled out their money from technology stocks and re-applied it into the cyclical sector stocks with the belief of a faster than expected reopen of the U.S economy.
If you have any questions, or suggestions let us know by emailing us at members@tradestocks.com. We look forward to hearing from you.
About the Author
The authors of this Scoop are the editorial team at Stock Card, led by Hoda Mehr. Hoda Mehr is CEO and Co-founder of Stock Card and the host of Renegade Investors podcast. She runs a community of 40,000 stock market investors and manages Stock Card's successful flagship portfolio, Roll with Our CEO, on Stock Card Portfolio Store. Hoda is an Economist with an MBA from Concordia, John Molson School of Business. She applies behavioral economics, data journalism, and storytelling to all aspects of her work. Before starting Stock Card, Hoda worked as a strategy and insights lead at technology companies including Symantec, Aimia and Sony. Create a free account to do your stock market research easily and mistake-free: Stock Card Stock Card
