Health Care Stocks Are Soaring and Tech Stocks Are Crashing

 

Health care stocks are soaring while Tech stocks are crashing. There are several reasons for the polarized mood on Wall Street this week. Here are some of them: The Federal Reserve's efforts to battle inflation and the rise of the tech bubble. Also, Wall Street is getting close to its bear market level. Read on to find out why the market is in such a funk today. Then, consider your own investment portfolio.

Health-care stocks jump

Listed below are a few health-care stocks that have surged today after falling on Monday. These companies are not as hot as the next decade, but you can find some great hidden gems in this industry. The recent pandemic has raised awareness of the importance of health care, and technology has largely made many diseases curable. Health-care stocks have a long way to go before they can outperform the market.

The most heavily shorted healthcare stocks in the U.S. have been on a wild ride this year. Even through mid-April, healthcare companies were disproportionately shorted, making their shares more volatile than those in other sectors. Health-care stocks have fallen over 12% so far this year, but the recent downturn could be a short-covering. The sector has been particularly vulnerable to the looming threat of foreign war and rising inflation.

Tech companies slump

The stock market is edging higher today after falling on Monday due to concerns about the ability of companies to pass on higher costs to customers. The rise in interest rates hurts stock prices and valuations, as it eats into future profits. For companies with high growth prospects, future profits are everything. For example, tech companies like Apple and Snap are huge growth stories that have stayed relatively flat over the past few years.

However, inflation has been a key concern for traders for months, which has been creating uncertainty for the markets. The recent Russian invasion of Ukraine prompted investors to worry about the country's economy. While the market initially focused on growth stocks, prices eventually shifted to other parts of the market, including energy and technology stocks. In addition, disappointing U.S. economic data and signs of lower corporate profits also weighed on stocks today.

Fed moves to combat inflation

The stock market is edging higher today after a sharp fall on Monday, helped in part by data on consumer prices. The Consumer Price Index rose 8.6 percent from a year ago, while a University of Michigan survey showed that consumers' expectations for long-term inflation increased. Economists at Jefferies said that the data suggests the Fed needs to increase rates to curb inflation. They also noted that the Fed hates deviations from its own guidance.

Despite a lackluster tone, investors are paying close attention to the Federal Reserve. Fed Chair Powell recently said that the central bank may take aggressive action if inflation pressures do not abate. Also, traders are concerned about China's economy after official data showed that manufacturing and consumer activity fell more than expected in April. On top of that, Shanghai and other industrial hubs were shut down due to a coronavirus outbreak. Meanwhile, the U.S. tech sector fell as part of a broader sell-off in the S&P 500.

Wall Street nears bear market level

Fears of a fragile economy and persistently high inflation have sent the stock market into a tailspin. Bond yields, which gauge the risk of inflation, have shot up to their highest levels in years. The S&P 500 is 20% below its early-year high, and a report last week that inflation has been rising at a faster rate than expected sent markets into a tailspin. Investors are expecting the Federal Reserve to take aggressive action to stabilize stock prices.

On May 20, the S&P 500 briefly dipped below 20 percent. This would indicate a bear market. In November 2021, the S&P 500 lost 29% from its record close. It is down from a record high of 1,527 in January. Tesla shares tumbled as CEO Elon Musk denied sexual harassment allegations. And as for the Nasdaq, it closed the day virtually unchanged, at a level near the bear market.