What gives? This was supposed to be the year of rising rates. The global economy is expanding, and some wage growth was seen as pushing the Fed toward its 2 percent target. Financial stocks were finally supposed to take the leadership away from technology.
Well, that trade is not working.
At first it seemed like it was. Going into February, the 10-year bond yield went from 2.4 percent to nearly 2.9 percent, topping at 2.95 percent on Feb. 22.
But since then, the trade has reversed. The latest down leg in the S&P 500 occurred shortly after 10 a.m. Thursday, when the 10-year yield resumed its leg down, touching 2.81 percent. Financials led the decline in stocks, with many regional banks such as KeyCorp and Zions dropping more than 1 percent in 45 minutes. Citigroup dropped 1.2 percent.
The combination of an existential crisis in social media stocks, mainly Facebook, with further confusion over how to discount the possibility of future trade wars and conflicting interpretations of the Fed's latest move is weighing on the market.
1) Where's the leadership? First and foremost, the stock market has lost its key leadership group, technology, and there is nothing taking its place. The subsectors that powered that sector forward last year, semiconductors and FAANG stocks, have stopped advancing and in many cases have reversed, led by Facebook: