Private equity stocks languish in August
President Donald Trump’s move to grant savers greater access to alternative assets in 401(k) plans hasn’t been enough to spare private equity stocks from a rocky August.
Blackstone, KKR, Apollo and Ares Management are on pace to snap multi-month winning streaks. All four of the names are down between 2.7% and 5.7% in August, and they are also lagging the S&P 500 on a year-to-date basis.
Apollo Global Management in the past month
Carlyle Group is a notable exception, tracking for its fourth consecutive monthly gain – up 3.2% in August.
The Wall Street Journal reports that some investors fear the firms will have a hard time selling their older investments at good prices in order to realize gains – and that worry could be weighing on the stocks.
— Adrian van Hauwermeiren, Darla Mercado
Longer-dated fixed-income yields at risk of rising, Capital Economics says
Long-dated government bonds of 10 years or more “have been under serious pressure at times this year,” thanks to waning demand from traditional buyers, “we doubt it’s coming back,” Capital Economics head of markets for Asia-Pacific Thomas Mathews wrote Tuesday.
The problem is that central banks themselves — as part of their move to normalize monetary policy and reduce their balance sheets — have stepped back from supporting the longer end of the market since the days of Quantitative Easing and zero interest rate policy.
“They’d provided a key source of demand for government bonds across the curve, and in many places held a very large share of the market. Demand has picked up from other sources to offset this reduction in demand from central banks. But, it hasn’t mostly been from institutions that typically purchase very-long-dated government bonds,” Mathews wrote.
“In the absence of genuine fiscal adjustment, which generally seems unlikely to us, we suspect that the very long end of the curve will remain volatile. And there’s a good chance that yields rise will again, at least for a while,” Mathews added.
— Scott Schnipper
See the stocks moving after hours
These are some of the stocks making notable after-hours moves:
- La-Z-Boy — Shares tumbled more than 21%. The manufacturer of recliners posted earnings of 47 cents per share, excluding items, in the fiscal first quarter, while analysts polled by FactSet penciled in 53 cents. The company also gave weaker-than-expected guidance for current-quarter revenue.
- Toll Brothers — The luxury homebuilder shed 1.6% despite beating expectations on both lines for the fiscal third quarter. Toll Brothers earned $3.73 per share on $2.88 billion in revenue, while Wall Street anticipated $3.60 a share and $2.85 billion, per LSEG.
— Alex Harring
Stock futures are near flat
Futures tied to the Dow, S&P 500 and Nasdaq 100 were all little changed shortly after 6 p.m. ET.
— Alex Harring