Stocks defying expectations in August

Yahoo Finance’s Jared Blikre reports recent moves in the markets.

Video Transcript

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ZACK GUZMAN: And for more on what we are seeing play out today, I want to bring on Yahoo Finance's Jared Blikre, he joins us once again here. And Jared, I mean, last hour you're kind of walking us through some of the big winners. It's been fascinating to watch this rotation back and forth between cyclicals and tech. And I think after we got those answers about rates here and Jay Powell taking a bit more time, growth's been leading the charge this month.

JARED BLIKRE: It definitely has, Zack. And I really hope you didn't jinx it. If we end August in the red, we're up about 3% on the S&P 500 right now. That's going to be a problem.

All right, let's go to the YFi Interactive where we see the month's action in the S&P 500. So we began with a nice little rally, gave it all back, undercut the lows from earlier in the month. And then it was off to the races one more time, climbing that wall of worry.

August is an historically volatile month, we usually see VIX spikes. And let's take a look at the VIX here, didn't get much, we saw this one but that didn't even reach 25. When you take a look at what's happened over the year, this is 2021, here we go, we got some bigger spikes in prior months. So really didn't pan out the way seasonality would have predicted. But seasonality only accounts for maybe up to one-third of a stock's movement.

So let's go to the bond market, here's the 10-year T note yield and I will go back to the month-to-date chart, and you can see a bunch of sideways action there, just chopping around between, let's see, 1.25 to the downside, maybe 1.38 to the upside there. And then you were talking about the growth stocks. And we can see those in the NASDAQ 100. We are taking a look at this, I think it was only 30 minutes to go, Zack, so I'm not going to repeat the same spiel here but I want to go over some of the sectors and industry groups.

So here, these are the brokers. Now we are taking a look at this because of Robinhood, lots going on there and we're actually seeing some pretty nice gains. Now the news we got before was I think it was yesterday, yes, that PayPal is getting into the broker space possibly. And that would just be a juggernaut.

And also payment for order flow, that is getting affected as well. Gary Gensler saying that a reform taking it off the table is on the table. You'll see one dark red spot down there, that is Virtu Financial, not a broker but they are a direct market maker, and guess what? They are one of the entities that pays for order flows. So they're on the opposite side of the Robinhood trade. And they got a little bit of a sell-off yesterday on that SEC Gensler news.

I do want to check out the sector action because that's pretty telling about the month. And you know, you were talking about rates, Zack, and especially with the Jackson Hole meeting, there was so much lead-up to that. I mean, we were talking about it for weeks beforehand, and then it was just kind of much ado about nothing, which is a good thing for the market. And guess what? Financials probably most affected by rates here, up the most, financials up 5%. Communication services, which houses Facebook and Google as well as Verizon and Verizon Media, our parent company, and also tech. So we got a bunch of mega-caps in there.

And then utilities. Utilities kind of strange, that was the defensive part of the sector action that I was seeing over the month. Also, staples was getting some love at the beginning of the month, also real estate at various times. So there was a bit of risk aversion going on but I was talking to brokers on the floor at the New York Stock Exchange quite a bit and there was just nothing going on. They said there's no reason for a large player to put on an order especially ahead of Jackson Hole. Now that that's in the rearview mirror, everybody's waiting not for next week, but the week after Labor Day. And that's when we're going to get the IPO calendar kind of cranking back up. So lots of expectations there, Zack.

ZACK GUZMAN: And on the flip-side too here, I mean, we talked about cyclicals, right? And earlier on in the year that was really the initial part of the rotation. You can't re-rotate back into growth if you hadn't seen money flow elsewhere. And financials, one of those that you were kind of looking at here, and energy was the only one on the list there that I saw red for the month. That's another one of those things that we've been watching play out here too just because of worries around China's rebound, their economic data coming in a little bit softer now as well. I mean, what are you seeing maybe on that side of the trade?

JARED BLIKRE: Well, when you consider that we just got over a hurricane, not a lot of volatile price action. In fact, it was pretty muted. I've seen crude oil just explode to the upside before based on storm damage, especially Katrina years ago, kind of ironic and bitter that this did happen on the anniversary of Katrina. But you look at what's happened in energy for the month, so let's get to a month-to-date. And we can see a bit of a downdraft here, crude oil doesn't always track one-to-one with the energy sector but we are seeing some gains there.

Let me pull up our energy heat map, fits and starts, that's what I'm going to call it. So the majors not doing so well, Exxon down 5%. CV, CV, Chevron, that's what it is, down 4%, thinking ahead to my next ticker set here. All in all, the crude oil situation, and I'm going to go to a chart of it right now.

We got an OPEC Plus meeting by the way tomorrow. So that's just one more factor. It's possible that they're going to do something, make a decision kind of in reaction to the storm but that's not expected. For the most part, market participants are expecting them to hike by 400,000 barrels per day. That's what they said they were going to do last month, probably not going to change.

Now, this is today's price action in crude, we can see it's down about 1%. Now, this chart is month-to-date, you can see we've been basically trading in a range here and are simply back up to that range. Let's go to a three-month view and then we can see the highs, this is going to be about 77 or so. So we are in a short-term downtrend, lower highs, and lower lows but maybe this is the start of a rebound here. We'll have to see, Zack.

ZACK GUZMAN: Yeah, and a lot of our oil and gas highlighting that the summer travel season really hit kind of peak demand there, and obviously we're moved past that now.