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Market check: Stocks open higher as bond yields rise

In this article:
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Yahoo Finance's Jared Blikre breaks down how stock and bond markets opened on Thursday.

Video Transcript

BRIAN SOZZI: Welcome back to Yahoo Finance Live. Let's head over to the New York Stock Exchange and check in with Yahoo Finance's Jared Blikre. Jared.

JARED BLIKRE: That's right. We are on day eight of this nascent rally. I'm looking at the S&P 500 year to date. And this is what we have so far. A little bit of a pause yesterday, but I would say we're still in a potential resistance zone. That goes all the way back to this price action here. So market isn't free and clear. It's never free and clear, but it would become more clear if it were able to puncture through these 4,600 highs. So we have to see if that comes to pass.

But, you know, we were talking to Ryan Detrick a little bit earlier about the incredible breadth thrust that we saw last week. Very, very rare to have the S&P 500 up four days, more than 1%. And it just goes back to the notion, strength begets strength. And you take a look at what's happened in the bond market. All the more impressive because this surge in yields normally would put a damper on any kind of risk market rally.

But it's been full speed ahead. So put it all together, and I'm feeling fairly bullish. I was constructively bullish before and a little bit more so now. Here's the US Dollar Index. You can see it's consolidating in a trading range. Have to see what comes of that, nothing new on that front.

Now you take a look at the sector action, kind of a quiet day so far. We got real estate and discretionary in the red there for a little bit. Materials, communication services, energy, tech, those are the leaders. But I want to go to our leaderboard, our sentiment index. We can see KWEB, the Chinese stocks, which were jumping yesterday, taking a little bit of a backseat. That's down over 3%. In the upper left, we got chip stocks, we got solar energy, internet, momentum, value. All of those are outperforming.

And you take a look at what's happened over the past five days, got some decent leadership here. We'll have to see what continues, but also taking a look at what's happened in meme stocks, now this is a five-day look, you can see GameStop sitting on gains of, what, 50%, AMC up about 30%, looking for-- ah, it looks like they're both taking a little bit of a backseat today, but overall, more bulls than bears here in this picture.

JULIE HYMAN: This morning, Jared Blikre, you wrote in the Yahoo Finance newsletter about surging inflation and how investors can sort of navigate it, which has been a big, big question that we have been talking a lot about.

JARED BLIKRE: It's pretty simple, I think. We have a rising interest rate environment, and we have the Fed hiking, potentially shrinking its balance sheet. Higher rates mean companies that can't pay their debts are going to go out of business, or they're going to have to restructure. Some kind of liquidity or a credit event is going to happen with a lot of companies. That's if the Fed actually does what it says it's going to do. Are they going to hike five times, seven times? Is it going to be 150 basis points, 200 basis points this year? All of this spells trouble for a lot of smaller companies.

And if you go to the YFi Interactive, I'm going to show you what happened to the Ark components. We know this story. Here's a year to date look. And just incredible to see how many of these stocks are still broken and off of those highs. Shopify down 50%, Roku down 45%.

And Brian, I think you're going to like this one. You want to talk about a bulging bicep chart, look at Roku, even with an M top in the middle. Just the technical analysis here that's rolling off my tongue, Sozzi, sometimes amazes me, what we're able to come up with here. But bottom line, be careful of companies with weak balance sheets. This is something that Liz Ann Saunders has been hammering since the beginning of last year. You got to be in high quality companies who can survive higher interest rates. That's about it.