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

Top Bear Market Tips from 10 Financial Advisers
investing

Top Bear Market Tips from 10 Financial Advisers

When a bull market turns into a bear market, it can be hard to know what to do. Take comfort in the guidance of 10 financial professionals.
June 30, 2022
Your Guide to Roth Conversions
Special Report
Tax Breaks

Your Guide to Roth Conversions

A Kiplinger Special Report
February 25, 2021
The 15 Best Stocks for the Rest of 2022
stocks to buy

The 15 Best Stocks for the Rest of 2022

The lesson of the past two years: Be ready for anything. Our 15 best stocks to buy for the rest of 2022 reflect several possible outcomes for the seco…
June 21, 2022

Recommended

Stock Market Today (7/1/22): Stocks Catch a Second Wind to Start Second Half
Stock Market Today

Stock Market Today (7/1/22): Stocks Catch a Second Wind to Start Second Half

Despite a dour ISM manufacturing index reading Friday, stocks broadly managed to pull themselves together and finish well in the black.
July 1, 2022
Stock Market Today (6/30/22): S&P Suffers Worst First Half Since 1970
Stock Market Today

Stock Market Today (6/30/22): S&P Suffers Worst First Half Since 1970

The major indexes produced a familiar result Thursday, finishing in the red to close out a dreary first six months of the year.
June 30, 2022
Can AI Beat the Market? 10 Stocks to Watch
stocks

Can AI Beat the Market? 10 Stocks to Watch

An artificial intelligence (AI) system identifying high-potential equities has been sharp in the past. Here are its 10 top stocks to watch over the ne…
June 30, 2022
Stock Market Today (6/29/22): Markets Steady, But Bed Bath, Cruise Lines Tumble
Stock Market Today

Stock Market Today (6/29/22): Markets Steady, But Bed Bath, Cruise Lines Tumble

The calmest market day of 2022 wasn't nearly so pleasant for a few individual stocks, including retailer BBBY and cruise operator CCL.
June 29, 2022