Rates Spike and Growth Stocks Drop

YOUNGSTOWN, Ohio — Recently, John Stewart touched on interest rates trending higher, but he didn’t expect the move to accelerate so quickly.

Over the last two weeks, the 10-year Treasury went from 1.15% to 1.5% inside of 10 trading days, which is a huge move, says the chief investment officer at Farmers Trust Co. This presents the potential for higher rates to undermine stock prices, “In fact, we have started to see this happen as stocks have rolled over during the past few sessions,” Stewart says.

“The growth stocks – prior market darlings like Apple, Amazon and Tesla – are the ones that are bearing the brunt of the downside the most,” he says. “As interest rates move up, these growth-oriented stocks tend to take it on the chin.”

This week, Stewart advises investors to focus on hard assets. While software may be changing our lives, “the stuff that makes stuff is still important,” he says. While companies that have the assets that produce consumable goods have lagged behind high-flying tech stocks over the past several years, he says that could be changing.

For more on these insights, as well as Stewart’s take on how inflation may impact summer travel, watch the latest episode of The Investors Edge above.

Copyright 2021 The Business Journal, Youngstown, Ohio.