CNBC Pro

The stock market is dividing because of rising rates. How to be on the right side of the trade

Share
Traders work on the floor of the NYSE.
NYSE

Rising interest rates are spooking the stock market, but shares linked to the economic comeback and value stocks are shining as investors bet on a recovery.

The rapid runup in bond yields caused the broader stock market to pause Monday, as investors backed away from tech and other growth names. The S&P 500 was down 0.77%, but the Nasdaq, led by tech, lost 2.46%. The Dow, however, gained slightly, rising 27 points, or less than 0.1% to 31,521.69.

The trend was playing out again Tuesday with Nasdaq 100 futures off big and the broader market futures down slightly.

"What the market is trying to figure out is will it pretty much ignore higher rates because they are a reflection of a strengthening economy, especially when the Fed itself says, 'no we're not going to raise rates,'" said Sam Stovall, chief investment strategist at CFRA.

More In Investing trends

CNBC ProSmall caps have slumped, but Jefferies says these cheap stocks are primed for a comeback
CNBC ProThe bull market will get a $500 billion cash injection by year-end, Goldman says
CNBC ProGoldman believes these quality stocks are cheap