Stock Market Today

Stock Market Today: The 'Reflation Trade' Kicks Back Into High Gear

The Dow and Nasdaq grew farther apart on Monday, as the Senate's COVID-stimulus green light sparked another rise in interest rates and another wave of selling in tech.

One session removed from a wild red-to-green finish for stocks, the market went back into rotation mode Monday, pulling the rug out from underneath the tech sector yet again.

Over the weekend, the Senate passed its version of President Joe Biden's $1.9 trillion stimulus plan, complete with $1,400 stimulus checks (albeit for fewer Americans than the House version). Treasury Secretary Janet Yellen continues to champion the bill, saying it would drive a "very strong economic recovery" that would enable the U.S. to reach "full employment" by 2022.

While she also said she didn't expect the measure to overheat the American economy, bonds continued their recent selloff, prompting the 10-year Treasury's yield to rise above 1.6%.

The Nasdaq Composite, which clawed out small gains in the morning, finished with a 2.4% decline to 12,609 amid heavy losses for the likes of Apple (AAPL, -4.2%), Tesla (TSLA, -5.8%) and Alphabet (GOOGL, -4.3%). That put the tech-heavy index in correction territory (a decline of 10% or more from a peak) and in the red for 2021.

Meanwhile, the Dow Jones Industrial Average continued its recent spate of outperformance, rising 1.0% to 31,802 on gains from Disney (DIS, +6.3%) and Cisco Systems (CSCO, +2.7%), among others.

Sign up for Kiplinger's FREE Investing Weekly e-letter for stock, ETF and mutual fund recommendations, and other investing advice.

Other action in the stock market today:

  • The S&P 500 dipped a modest 0.5% to 3,821.
  • The small-cap Russell 2000 managed to gain 0.5% to 2,202.
  • U.S. crude oil futures receded by 1.6% to close at $65.05 per barrel.
  • Gold futures declined yet again, dipping 1.2% to 11-year lows at $1,678.90 per ounce.
  • Bitcoin prices improved by 5.3% over the weekend, finishing Monday at $51,800. (Bitcoin trades 24 hours a day; prices reported here are as of 4 p.m. each trading day.)
stock chart for 030821

The Reflation Trade

How much longer could this incline in rates continue? John Luke Tyner, fixed income analyst at Aptus Capital Advisors, is among those who believe there's plenty more fuel in the tank.

"Overall we are bullish on the U.S. economy to improve and believe that interest rates (nominal and real) will continue to rise," he says. "The move in rates higher has been global, and the U.S. is one of the only developed countries where yields are still below Covid highs (~1.92%). More stimulus will only help quicken the cause."

That should continue the current rotation into value stocks broadly, and into sectors such as financials and materials specifically – the so-called reflation trade in which a quick bout of inflation "normalizes" interest rates.

Those interested in harnessing this shift have a wealth of options; these seven reflation-trade picks, including both stocks and funds, appear to be juicy opportunities on their own, but also exemplify the areas of the market you should target.

Most Popular

Your Guide to Roth Conversions
Special Report
Tax Breaks

Your Guide to Roth Conversions

A Kiplinger Special Report
February 25, 2021
5 Beaten-Down Stocks to Buy on the Dip
stocks to buy

5 Beaten-Down Stocks to Buy on the Dip

The market has delivered some nauseating volatility of late. The good news? That has teed up a few great stocks to buy at a discount.
September 27, 2021
10 Best Stocks for Rising Interest Rates
stocks

10 Best Stocks for Rising Interest Rates

The 10-year Treasury yield is hovering near its highest level in months. Here are 10 of the best stocks to buy in a rising interest-rate environment.
September 30, 2021

Recommended

Stock Market Today (10/15/21): Stocks Zip Higher on Robust Retail Sales, Earnings
Stock Market Today

Stock Market Today (10/15/21): Stocks Zip Higher on Robust Retail Sales, Earnings

A second consecutive month of unexpected retail-sales growth and more sterling earnings from the financial sector gave Wall Street a lift Friday,
October 15, 2021
Kiplinger's Weekly Earnings Calendar
stocks

Kiplinger's Weekly Earnings Calendar

Check out our earnings calendar for the upcoming week, as well as our previews of the more noteworthy reports.
October 15, 2021
Stock Market Today (10/14/21): Economic Data, Earnings Fuel Stock Surge
Stock Market Today

Stock Market Today (10/14/21): Economic Data, Earnings Fuel Stock Surge

The producer price index came in below expectations, while weekly jobless claims hit their lowest level since mid-March 2020.
October 14, 2021
General Mills (GIS) Is Wholesome … On Several Counts
ESG

General Mills (GIS) Is Wholesome … On Several Counts

Strong ESG performance, stability and dependable dividends build a compelling case for keeping General Mills on your watch list.
October 14, 2021