The pressure on bonds continues this morning and that has helped to trigger broad-based selling. This time the big-caps are not a safe haven. The DJIA is trading down slightly more than small-caps but that isn't much comfort for small-cap investors watching the Russell 2000 struggle with the lows of the week.
Breadth is putrid with around 1,850 gainers to 4,950 decliners. What is even worse is that the number or new 12-month lows has grown to more than 320 while new highs have contracted to just around 50.
One bright spot out there is the banks, which are benefiting from the fact that longer-term interest rates are going up faster than shorter-term rates. The yield curve is steeper and that is good for banks that borrow short term and lend longer term.
The FANG names are being hit and the mighty Apple (AAPL) , which has been one of the main reasons that large-caps have outperformed, is finally in the red.
Also having a good day is Eli Lilly (LLY) which I've recently mentioned as a good-looking chart setup. It gapped up on news and I've taken the opportunity to sell down my position.
Another positive outlier Thursday is Constellation Brands (STZ) , which is largely responsible for the frenzy in cannabis stocks over the past couple months but has failed to gain any traction after it announced a $4 billion investment in Canopy Growth (CGC) on Aug. 15. The main problem for STZ was that they really didn't provide any details as to how that invest would increase the bottom line in the near term.
Constellation reported earnings Wednesday night that were well ahead of estimates. The company bumped up its guidance as well. There still are few details about how the CGC investment will pay off but at least the deal is not hurting the bottom-line numbers in the short term.
STZ trades with a trailing P/E multiple of around 23x. Earnings per share are expected to grow about 10% over the next year but with the beat in the current report and the potential of the CGC investment, investors are willing to pay a premium.
The poor market action Thursday is probably hurting the price action of STZ but this report should help to create a supply of buyers waiting to enter on weakness.