Stock Market Update

[BRIEFING.COM] The market’s divergence has widened further approaching midday. Growth stocks remain under pressure, the Russell 2000 is down 0.7%, and the Dow’s gain has narrowed to 0.1%. The latest Treasury snapshot puts the 10-yr note yield at 5.09%, unchanged today but down 15 basis points for the week.

The Russell 3000 Growth Index is down 1.1% today and 3.9% week-to-date, while the Russell 2000 has fallen 2.0% this week. The more pronounced damage is in high-beta stocks, evidenced by an 8.1% week-to-date decline in the Invesco S&P 500 High Beta ETF (SPHB).

That underperformance, despite the weekly decline in Treasury yields, suggests the selling is not simply an interest-rate response. Investors appear to be reducing exposure to higher-valuation, more volatile stocks, with the weakness in small caps indicating that the caution extends beyond the largest growth names, perhaps because participants are not convinced that rates have finished moving higher or perhaps because they worry that higher rates will ultimately weaken demand and earnings growth prospects.