Dow Jones Industrial Average
was inching higher Tuesday morning, as the
ticked lower, potentially ending its six-day winning streak.
The Dow has risen 26.54 points, or 0.1%, while the
has advanced dipped 0.1%, and the Nasdaq Composite has declined 0.2%.
Today, the Federal Reserve prepares to buy bond ETFs. What that means remains to be seen. It’s important to remember that the bond market has recovered without the Fed having to buy a single corporate bond. “As of now, neither the TALF nor the Corporate Bond facilities have yet to purchase or finance a single bond, and we remarked last month on how the Fed was able to keep spreads contained and get issuance windows back open in credit without ever firing a shot,” write strategists at Pavilion Global Markets. “Fund flows back into [the
iShares iBoxx $ High Yield Corporate Bond ETF
(HYG) and the
SPDR Bloomberg Barclays High Yield Bond ETF
(JNK)] continue to be robust, and pricing in the ETFs has pushed NAVs back to near the all-time highs set last year.”
We’ll be keeping a close eye on the Nasdaq. Yesterday, you’ll remember, saw the Nasdaq rise for a sixth day, even as the Dow fell, a sign that investors continue to plunge into what has been working: big tech and health care. The Dow doesn’t have enough of those companies when that’s all that’s working; the Nasdaq’s cup runneth over.
Long Nasdaq winning streaks haven’t been great news for the stock market, however, at least in the shorter term. This is just the 12th time that the Nasdaq Composite has had a six-day winning streak following a drop of 30% or more from an all-time high. The S&P 500 has dropped and average of 5.5% over the following three months following the previous episodes.
It’s just one more reason to be more cautious, at least for now.
Markets Now is a quick take on what’s happening with the Dow Jones Industrial Average and other major market indexes. Don’t forget to check out the rest of Barron’s markets coverage.
Write to Ben Levisohn at Ben.Levisohn@barrons.com