President Biden’s $1.9trn American Rescue Plan was finally approved and signed into law last week. The stimulus cheques, which were sent out last weekend, are a lifeline for more than 20 million Americans still receiving unemployment benefits.
Shares in the US media giant ViacomCBS jumped another 10% on Friday (12 Mar) as investors bustled to buy them before they began trading ‘ex-dividend’. Such buyers are in line for a generous 24 cents per share dividend, which the company has now maintained for six quarters in a row.
After seeing its shares demolished in last year’s pandemicinduced sell-off, the company has become the S&P’s star performer so far in 2021 with the shares up around 160% by Friday’s close.
The stock jumped 30% in January when the legacy cable TV provider announced its new Paramount+ streaming service, which subsequently launched on 4 March. It was also boosted by the Reddit ‘short squeeze’ of the time and has crested higher ever since, gaining more than 60% in the last month.
Its Paramount+ offering aims to take business from the likes of Netflix, Disney+, Amazon Prime and others with over 30,000 on-demand TV shows, live sports coverage and 24-hour rolling news.
So far in March, the US Nasdaq 100 tech index has experienced levels of volatility not seen since last year’s market panic. According to Bloomberg data, the index saw market moves
of greater than 1% (both up and down) on eight of the first 10 trading days in March.
As Quilter Investors portfolio manager Ian Jensen-Humphreys explains, “This is a sign that many star growth stocks are coming under pressure as the yield on 10-year US Treasuries pushes higher and investors increasingly focus on the cheaper cyclical companies that have been left behind. It could signal the start of a new investment cycle where value stocks come back into favour.
“Higher interest rates and inflation tend to be bad news for high-growth stocks,” he says. “As their likely profits occur further into the future, higher interest rates reduce their value today. The Nasdaq is still some way off its February high,” he adds, “but it could suffer a significant correction if we see Treasury yields climbing steeply again.”
