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To use an apt analogy, big tech stocks are like Elon Musk’s rockets. Seemingly beyond Earth’s gravitational pull, they are now testing the laws of physics (with the exception of Tesla Inc., which is suddenly succumbing to gravity). In language indebted to science fiction, some well-established market relationships are shifting.

Bond yields jolted higher on Friday, thanks to a strong jobs report (of which more later). What effect did they have on the stock market? Tech stocks had a great day. Recall that the popular argument has been that higher long-term yields are particularly harmful for “long-duration” companies, such as big tech groups. Most of their value is in future earnings, which must be discounted at a higher rate. Thus big tech did badly in 2022 as yields rose, and well in 2023 as they came back under control. And so far this year, yields have risen — and so have these stocks. This nifty chart is from Michael Hartnett of BofA Securities:

QOSHE - Elon's Cage Fight With Zuckerberg Just Happened. He Lost - John Authers
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Elon's Cage Fight With Zuckerberg Just Happened. He Lost

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05.02.2024

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To use an apt analogy, big tech stocks are like Elon Musk’s rockets. Seemingly beyond Earth’s gravitational pull, they are now testing the laws of........

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