Many investors are wondering what is taking place in the stock market.
Tech stocks, which all year have been surging, are now tanking. At the same time, some of the biggest stocks that have taken a beating during 2017 in the market like banks, airlines and retailers are rallying sharply.
The Dow reached another all-time high on Wednesday due to increased hopes of tax reform, and comments by President Donald Trump’s Federal Reserve nominee Jerome Powell that were bank friendly, during his hearing before the Senate Tuesday.
The Dow is now up over 20% for the year, and closing in on 24,000.
Transportation stocks are surging, thanks to huge gains by airlines Delta, JetBlue and Southwest. That despite oil prices recently increasing.
Several retailers that have been beaten down all year like Nordstrom, Macy’s and Target were amongst the biggest gainers on Wednesday in the S&P 500.
At the same time, tech stocks, which propelled the market all year, were beginning to tank. The NASDAQ dropped over 1% led by losses in Alphabet, Apple, Facebook and Netflix.
Nvidia and PayPal as well as Electronic Arts and Activision Blizzard two hot gaming stocks plunged as well. They have been some of the top stocks in the market most of this year.
One strategist thinks this is a positive sign. He said it makes good sense for investors to begin cashing their chips in, with the tech stocks and then look for other bargains in different sectors.
Strong sales for Black Friday as well as Cyber Monday was good news for department stores that have struggled for over a year, along with specialty retailers who of late have thrived such as Best Buy, Home Depot and Children’s Place.
Transportation stocks surged surprising many as they have lagged behind the surge in 2017. The stocks were lifted by strong numbers on the GDP Wednesday.
Economic growth grew last quarter to its best level in over three years.
Analysts say a healthier economy will outweigh negative effects of higher prices for oil on truckers, railroads and airlines. Crude moved higher Thursday morning on news that OPEC and 10 non-member oil producers would extend their production cuts agreement through the end of 2018.
The banks should see a benefit from the Fed policies of Powell once he is confirmed by the Senate and takes over for Janet Yellen. The market has been impressed by him and as he answered direct and spoke less like a Fed member and more like a businessman.