Winners and Sinners

Mike Zaccardi

LAST WEEK SAW additional gains for value stocks, while shares of once highflying growth companies continued to struggle. Meanwhile, foreign markets again rallied. Vanguard FTSE All-World ex-U.S. ETF (symbol: VEU) rose more than 1% last week, even as Vanguard Total Stock Market ETF (VTI) slipped 0.5%.

Let’s further unpack these trends.

The Nasdaq Composite has endured its worst start to a year since 2009. At the same time, blue chip stocks and some of last year’s losers are suddenly in favor. U.S. high-dividend companies, such as those owned by Vanguard High Dividend Yield ETF (VYM), are up big. Venture overseas for yield, and you’ll see even larger gains. Vanguard International High Dividend Yield ETF (VYMI) is up almost 5% in 2022.

A heat map illustrates the story. Shares of some emerging market companies—such as Alibaba and Taiwan Semiconductor—are red hot, higher by more than 10% in the past two weeks. Meanwhile, energy stocks are in the black on the heels of rebounding oil prices. Brazil’s Petroleo Brasileiro, China’s PetroChina and France’s TotalEnergies are green across the board—each up by about 15% this year.

On Friday morning, the market digested the monthly University of Michigan Consumer Sentiment survey. That report showed buying conditions for vehicles were at their poorest level in the survey’s history. New and used car prices are through the roof. A key reason: Semiconductor chips are extremely hard to come by, thanks to the pandemic.

Moreover, last Wednesday’s Consumer Price Index report showed used car prices up a whopping 37% from a year ago, while the sticker price on the average new vehicle is 12% higher. How are large-cap value stocks like Ford and Toyota doing amid this car crisis? Ford’s shares are up 21% in 2022, while Toyota has climbed 14%.

As value-oriented international markets, stable dividend stocks, oil and gas companies, and traditional automakers rally, shares of innovative tech companies are down big. Zoom, Teladoc and Robinhood are all more than 70% below their pandemic peaks. It’s almost like the 2000-02 dot-com crash all over again.

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