JUMP IN RATES HURTS FINANCIALS AND HOMEBUILDERs -- ADP AND SUNW LEAD S&P 500 HIGHER -- CHIP VS. BOND ETFs
RATE-SENSITIVE STOCKS DROP... With interest rates jumping sharply today, rate-sensitive stocks are being sold. Chart 1 shows the Financials Select Sector SPDR falling beneath its 50-day line. Financials are the day's weakest group. Banks and brokers are being sold. So are stocks tied to housing. Countrywide Financial is one of the day's biggest percentage losers (Chart 2). Homebuilders are also falling. Kaufman and Broad Home is gapping down as are most of the big homebuilders.
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ADP AND SUN LEAD S&P 500... While today's weakest S&P 500 stocks are financials, its strongest are in technology. Two of the day's strongest S&P stocks are ADP and Sun Microsystems. ADP is approaching its 2004 high. Sun has climbed back above its 200-day average on strong volume. That's a strong combination.
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TALE OF TWO MARKETS... The next two ETF charts pretty well sum up Friday's action. Semiconductor iShares are the day's strongest ETF as the chips lead the market higher. The 20 Year Treasury Bond Fund is tumbling along with bond prices. The same strong economic news that's pushing stocks higher is pushing bonds lower.
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