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Financial stocks plunge as Treasury yields crash and volatility spikes – Yahoo Finance

Yahoo Finance Live’s Jared Blikre breaks down midday trading in the stock market as the Russia-Ukraine war intensifies.

Video Transcript

ALEXIS CHRISTOFOROUS: We want to check in with Jared Blikre for a look at what’s trending today. And Jared, financials having the worst day in about two years amid this crash we’re seeing over in bond yields. And at least one firm today, I know Morgan Stanley, saying now’s a good time to get into financials.

JARED BLIKRE: Yeah, it depends on who you turn to on Wall Street. I’m seeing a lot of differing opinions about exactly what to do and how to handle these markets, not surprisingly. There are so many unknowns. I was reading a Goldman Sachs note earlier today, and they had some interesting views on what’s going to happen with bond yields. I’ll get to that in a second.

The carnage you’re seeing here in these bank stocks, with JPMorgan down 5%, Wells Fargo down nearly 6% largely due to the volatility in yields. Today yields are crashing to the downside, as you were talking about, Alexis. And I just want to show the five-year T-Note yield is down 19 basis points. I got to check. I don’t remember the last time it was down that much, but that is certainly what we would consider crash levels.

And then you take a look at the 10-year T-Note yield, that is down 15 basis points, a little bit less. And the 30-year, that is down, looks like, 9 basis points. So overall, the yield curve actually expanding, steepening, but that’s only because the shorter term yields are crashing faster than the longer term yields.

And we can also see this playing out in the volatility markets. Here is the VIX’s equities we can see marching back up to these highs that we’ve seen this spike high over here, which was rejected. That was concurrent with that big sell-off we saw in late January that, kind of, scared everybody out of the markets. Well, guess what, we are just inching, if not surging, higher to those prior levels.

So let me just take it back to the financial sector as you said. Usually, you don’t see these bigger moves in a lot of these stocks. Here’s JPMorgan, it was only, I believe, the third quarter, early fourth quarter last year that we were looking at record highs in the stock, and what a reversal of fortunes. I believe this was at right here in the transition to the third and fourth quarter, so really seeing a lot of carnage in the markets. But today it is focused on those financials.

Yeah, financials really getting beaten up today. On the flip side, Target jumping by the most since 2019 after saying it can keep the growth going.

JARED BLIKRE: That’s right. And a number of things working for target this quarter. First of all, fourth quarter adjusted EPS, that was a beat. Full year earnings guidance, that was a beat, and finally, their margin concerns. There was a lot of concern over that over the last year or two years, for that matter. Those are dwindling as well. Also want to note that they announced a $5 billion investment in their stores. They’re going to build 30 more stores in 2022. And that is going to continue, that $5 billion investment, over the next few years.

So let me pull up a stock chart here. You see Target up 10%. This is a stock that petered out in mid to late last year along with a lot of other names. And if you take a look at the three-year chart here, still pretty impressive price action. This was Yahoo Finance’s Company of the Year in 2019. We saw a little bit of a drop off here but not the biggest one into the pandemic. And then we saw that incredible rise along with other retail stocks.

So let me just give you some analysts’ commentary. This one comes from a bear. They are rating the stock and outperform with a price target of $275. You can see the current price $220. And they are saying encouraging results with the fourth quarter EPS topping the Street View and your guidance. It is comfortably above street expectations. And while the fourth quarter is there, comparable growth, it trailed his and the Street’s estimate, store traffic with strong rising 8.1%.

And particularly noteworthy, the analyst also pleased to see gross margin pressure moderate from third quarter earnings and saying it was the EBITDA margin forecast of at least 8% that is arguably better than feared. So taking a look at Target, nice to see a bit of green in the retail space here today.

ALEXIS CHRISTOFOROUS: And we’re also seeing green in the cryptocurrency space today, something we haven’t seen in a while, because we know that cryptos were working in lockstep with equities. Now it seems like investors getting a little more comfortable using that digital asset as a hedge. And I that Bitcoin marching toward that $45,000 level. That’s a key level for the crypto.

JARED BLIKRE: That’s right. I’m looking forward to this panel with David Hollerith and Jen Schonberger in just a few minutes. I just want to trace out what’s happened over the last few days. Here’s a 12-day look at Bitcoin and then put some candlesticks, because a very important chart formation is emerging here. Actually, let me get a year to date view, and I think we can see it a little bit better.

Yes, the makings of a W bottom. Here is the W, and we can see we are marching right back to the neckline. That neckline is $45,000, and that is a key level to hit there. If you take a slightly longer term view, this is a six-month view, here are record highs just short of $70,000, pretty steep downward trend right here. So we’re not out of the woods just yet if you’re a Bitcoin holder but nevertheless have to get past that $45,000 level. Even then, we’re not in the clear necessarily, have to consider whether this is simply a short covering rally, guys.

ALEXIS CHRISTOFOROUS: All right, thanks so much, Jared Blikre. Lots to cover there.

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