Wall Street humbled as fast-reversing markets confound the pros
value stocks,” the Pacific Investment Management co-founder posted Thursday morning on X, formerly known as Twitter. “Avoid tech for now.”
Just a day later, the tech-heavy Nasdaq Composite Index notched its best session since February after Microsoft Corp. and Alphabet Inc. showed the AI earnings bonanza still has juice.
It’s the latest gut-check for anyone trying to get a handle on the short-term moves of markets, just as new questions emerge about the viability of an economic soft landing. An ETF riding the momentum trade shot up 3.5% this week, after plunging 5.6% in the previous week.
Macro signals continue to confound. Growth eased more than expected, a report showed Thursday, yet indicators of consumption and investment remain constructive. A day later strong personal-spending data was duly cheered by economic bulls, while raising the eyebrows of inflation hawks.
Undeterred, money managers just pushed the S&P 500 more than 2.5% higher on the week as they continue to pay through the nose for companies that promise to post profits in the years ahead.
“Tech/growth used to be affected by higher yields,” Gross wrote in an email to Bloomberg on Friday. “But not for now.”
With swings in stocks and Treasuries elevated, money managers sharing the bond king’s caution have been rushing to hedge richly priced equities via exchange-traded funds. Meta Platforms Inc. and International Business Machines Corp., for example, lost $150 billion in market value combined on Thursday alone.
Yet even as traders price out the
