CORRECT: Fed Shocks Stocks With Blow to Value Investors’ Dreams
- Hawkish Fed tilt delivered ‘gut check’ to value trade: Lerner
- Large-caps best equal-weighted index by most since January
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All it took was a few dots from the Federal Reserve to put the nascent value-stock revival in doubt.
Cyclical companies tied to reopening and reflation bore the brunt of the reversal, posting some of the worst returns of the year this week, while the Nasdaq 100 emerged -- as it did in 2020 -- as a beneficiary. Volatility broke out in equities following Wednesday’s Fed decision, where policy makers projected raising interest rates twice by the end of 2023. The tech rally was accompanied by a violent flattening of the 5-year to 30-year Treasury yield curve, which narrowed by the most since 2011 on a weekly basis.