Fearful that the selling pressure would intensify for AI hardware suppliers, investors snapped up stocks in the discounted sectors. Exchange-traded fund investors who bottomed a few weeks ago signaled a chance to buy them at a discount.
The Utilities Select Sector (XLU) bottomed at $39.03 late last month. When the 30-Year Treasury bond (TLT) and 10-Year (IEF) yields dipped, XLU stock traded toward $42. The Real Estate Investment Trust (XLRE) looked like it bottomed. But at a yield of 3.48% for the XLRE ETF, a 2-year Treasury bond offers risk-free returns.
On Thursday, selling in the tech sector started strong in the morning but moderated by the end of the day. Intel (INTC) and Nvidia (NVDA) both trimmed losses to end down by less than 2%. Micron Technology (MU) traded below $900 intraday. It closed at $931.24.
Investors rotated out of tech names like Applied Materials (AMAT), Cisco Systems (CSCO), and especially Dell Technologies (DELL). Dell stock fell by 6.8%.
The home improvement sector rose. Home Depot (HD) and Lowe’s (LOW) gained. Drug firms, viewed as discounted value holdings, also jumped. Eli Lilly (LLY) led the advance, while Bristol Myers (BMY) and Gilead Sciences (GILD) followed.
Retail firms also rallied. Despite high inflation and producer price index figures, Costco (COST) and Walmart (WMT) broke out of their lows. WMT stock traded back at levels not seen since August.
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