Market Recap: Thursday, March 11

Stocks advanced on Thursday and the Dow and S&P 500 each set record highs after President Joe Biden signed into law another expansive coronavirus relief package. Technology shares rebounded, and Treasury yields steadied. The S&P 500 added more than 1% to reach both a record intraday and closing high. The Nasdaq outperformed as tech stocks resurged, and the index climbed 2.5%. The risk rally extended to Bitcoin, which rallied to more than $57,000 and closed in on the record high the token achieved late last month. The Dow added 0.6%, or 188 points, and also reached a closing high. Needham Small Cap Growth Fund PM Chris Retzler - and
Director of Portfolio Strategy at Verdence Capital Advisors, Megan Horneman, joined Yahoo Finance Live to discuss.

Video Transcript

ADAM SHAPIRO: A little over 3 minutes to the closing bell. Joining us to get us there are Chris Retzler, Needham Small Cap Growth Fund portfolio manager, and Megan Horneman, director of portfolio strategy at Vernon's Capital Advisors. Megan, let's start with you. A lot of people talking about the need to sell tech. But that may have been overdone because now we see them buying. What do you say?

MEGAN HORNEMAN: The reason I think that they're buying this week is because you've seen some settling in the interest rate market. That was one of the big sources of volatility that we saw over the past couple weeks. So not only did we get some decent bond auctions this week that helped settle the markets down a bit, but then the ECB this morning came in and announced that they would be more aggressive in their bond buying. So this has all helped to settle the volatility in fixed income, which has given technology another bid here in the market.

SEANA SMITH: OK, Chris, hang on. We're going to get to you in just a minute. But first, we want to head over to our markets reporter Jared Blikre who is watching some of the action into the close. And Jared, what sticks out to you?

JARED BLIKRE: Well, tech is still the big leader here. And we're going to delve into some heat maps in a second. Just want to show the Wi-Fi interactive, where we are for the day. NASDAQ leading the pack up 2 and 1/2% Small Caps close behind, Russell 2000 up 2%, S&P 1%, and Dow, the Dow is up about 1/2 a percent.

And guess what? We got tons of markets set for record closes including the DOW, including the S&P 500, and a bunch of sectors like financials, communication, services, materials, industrials, list goes on.

So here is the NASDAQ 100. And now Google Alphabet is up over 3% along with Facebook, Tesla's building on its gains up almost 5% now. Nvidia and PayPal each up 4%. So those software and semiconductor names that we saw take a spill a few days ago, those are doing well today. Also checking in on the banking sector one final time before the close. That's where we've seen the most weakness today. Also seeing some weakness in Staples. But you look at JP Morgan, that's down half a percent. Looks like Credit Suisse is down the most. That's down 4 and 1/2%.

The cannabis space is something that we haven't talked much about today. And that's saying a lot of money love here. We got Aphria, that's up nearly 12%. Tilray is up 17%. And looks like Canopy Growth, that's up 7% as well.

I want to take a look at the VIX because that has come down. We're seeing it approaching the 20 level. Now it hasn't been able to dip materially below 20 since before the COVID panic sell off began. But we are seeing it come down, which is good to see. NASDAQ volatility however, still a bit elevated though it's coming down too. You can see it has a 30 handle on it.

We're talking about the bond market, that settled an hour ago. But worth noting that the 10 year T- note yield up one basis point there. And finally taking a look at the US dollar index, that is down. So some pressure taking off right there. I'm going to go back and we're going to take a look at the Dow now. We took a look at the NASDAQ 100 before. And we can see some weakness in some of the staples and financials that we've been talking about. But for the most part, seeing some really nice gains here heading into the closing bell.

[BELL RINGING]

SEANA SMITH: We're closing out a record day here. As you can see, the Dow, S&P, and NASDAQ all closing in the green, Dow up 189 points, S&P as we shake out the final last trades, S&P up just around 1%. And NASDAQ was a big outperformer. That was the case for most of the trading day up just around 2 and 1/2%.

Jared was just going through some of those big tech names, moving to the upside, Apple up just around 1 and 1/2%, Microsoft, Amazon both up just around 2%. Facebook and Google, those were big gainers up just around 3% today in terms of the sector action. Technology, consume-- communication services, consumer discretionary, and real estate leading the way today.

And then, of course, the Russell 2000, the Small Cap index up just around 2%. We want to bring back in Megan Horneman and Chris Retzler to help us break down the action that we see not only today, but what we've seen over the last several weeks. And Chris, let me go to you on the Russell 2000 because I know you closely watch the small cap index here up just around 2% today, up around 18% since the start of the year. Where do you see-- I guess what's fueling that buying? And do you see this momentum carrying forward into the future?

CHRIS RETZLER: So small caps have certainly had a recovery after a lot of the large cap tech that did very well the last few years. If you break down the Russell, where the strength has been this year has been much more focused on the value names. Energy and financials have recovered quite substantially, while technology has corrected some with the NASDAQ pullback that we saw over the last few weeks on higher interest rates, higher inflation risk.

But when I look forward at high growth in areas that we want to be investing in, it continues to be technology. We think that the tech names in the Russell will come back and probably outperform more in the second half over the value names. We think that there's a lot of pent up economic activity, stimulus being put into the market at this point tends to take a little while to filter through.

But there's also just some major secular growth stories. 5G, infrastructure, communications, electric vehicles, just tremendous amount of opportunity out there. You see semiconductors are sold out. That's a supply issue, not a demand issue. And that's very good for long term investors we think in technology.

ADAM SHAPIRO: Chris, Megan, stand by because Anjalee Khemlani is joining us. There's breaking news with Novavax. What have you got, Anjalee?

ANJALEE KHEMLANI: That's correct, Adam. We just learned that Novavax has released their final efficacy results of their COVID-19 vaccine in studies in the UK and South Africa. And that's showing really high efficacy rates. We got 96.4% in the UK with the original strain of COVID-19 as well as 86% against the UK strain. That's the B.1.1.7 that we know is of concern here in the US and is highly transmissible, as well as an aggregate of 89% in the UK.

Moving to South Africa now, that is 55% in non HIV participants. So that is showing some pretty strong results and kind of on par with what we've seen. Novavax is supposed to be one of those that is of higher efficacy compared to others. But we can't do necessarily an apples to apples comparison to, say, Pfizer and Moderna that saw similar results here in the US. But we did see lower results from Johnson & Johnson when you looked at the global sort of effect. And so this is important because we know that Novavax is trying to use some of this world data to get approval here in the US.

ADAM SHAPIRO: And we should point out that shares in Novavax closed up almost 9%. And right now after hours, they're trading up about 7% on this news. Anjalee, thank you. Megan, want to go back to you because a lot of people are concerned about inflation. And you've raised an issue that inflation, or the cost of lumber, and the items that are needed to build a house, those are going up and could have an impact on the housing market. What warnings would you have for people who are expecting housing to keep going up on that?

MEGAN HORNEMAN: So I think one of-- there's a couple of things that go along with the housing market. There is demand for housing. We've seen that. We see that in a lot of the surveys. But at the end of the day, the inventory is very low. Interest rates have ticked up. They're now above 3%. So affordability has come down. When you look at the higher interest rates, home prices surging, the cost of building a house much higher, there is a risk that you could see some of the housing markets slow as we get through the summer months.

SEANA SMITH: Chris, how are you looking at inflation fears? Because they seem to be moderating a bit as you look at the broader market. But what are you anticipating that we'll likely see?

CHRIS RETZLER: I think we're going to have some moderate inflation near term. A lot of this stimulus is going to be money that's put into various pockets where I just don't think it's going to have a very long term inflationary impact. What it does is it levers up more debt on the nation, which is unfortunate that it's at this level.

I think you'd really like to see more to those that were really impacted, no fault of their own, in those industries that really need help. But I think inflation long term, we were combating deflation for the last 13 years. I just don't think $1.9 trillion solves the deflationary global situation. So I think it's temporal. And again, I think you look for good quality companies run by good management teams. And that's where you make money long term in the equity markets.

ADAM SHAPIRO: Chris, you've also talked about and you mentioned in just a minute ago about 5G being one of those areas where you should look. And yet our parent company, I won't put you on the spot to ask about Verizon, but Verizon got hit today because it went to the credit markets to borrow $36 billion because we're trying to buy, or we are buying, we are the Treasury Department, those middle spectrum airwaves. Is the debt load that companies like Verizon, or AT&T, that they take on to finance the 5G expansion, is that of concern to an investor going forward?

CHRIS RETZLER: Well, I would say your parent company is a very long term investor. And that's what they're matching the capital up with. Where we would as investors look is, well, where else are they going to spend that money when they put and deploy that spectrum? And that's capital equipment. The towers, the equipment that goes on the towers, those are areas, again, a lot of semiconductors, radio frequency. All of that is where the dollars are going to be spent. And so as investors, that's what we look to. But again, your company, parent company, great long term investors. And these are long term investments. So they're doing the right thing.

SEANA SMITH: Megan, I want to quickly ask you about jobs because we got that jobless claims number out this morning. It was better than what TheStreet was anticipating. We also got that stronger than expected February jobs number. How is the market looking at the jobs market? And I guess how big of a worry is it that before the latest numbers that we've seen, we saw a pretty significant slowdown?

MEGAN HORNEMAN: I think a lot of that had to do with the fact that there was still a big portion of the country that was in lockdown. But you're seeing very rapidly more and more states and counties opening up. So this should definitely help the labor market going forward. You're seeing it better with the jobless claims, you're seeing it better with the continuing claims, you're seeing it better even with the job openings that we saw today. So all we need to do is get the economy open. We have the fix for that. It's the vaccine.

I would mention, we talked about the stimulus package. I wish that there was a little bit more in the stimulus package to actually get the vaccine out and moving in the economy because that is the fix. If we get things reopened, the job market will gradually heal. And that is what will lead to the multiyear acceleration that we believe we're going to see in economic growth.