Market Recap: Monday, March 29

Wall Street ended a volatile session on a mixed note, with the broader market lagging but blue-chip stocks edging to a new record, as the sudden unwinding of a hedge fund ricocheted across markets. On Friday, the S&P 500, Dow and Nasdaq closed higher by more than 1%, with the broader market posting its best in three weeks. However, traders were watching several big stocks like Viacom and Discovery, after a volatile session on Friday saw several names take a hit linked to liquidation by Bill Hwang, a fund manager and the ex-head of Tiger Management's family office. Kopernik Global Investors Alissa Corcoran and Comerica Bank Chief Economist Robert Dye joined Yahoo Finance Live to break down the details.

Video Transcript

ADAM SHAPIRO: Heading toward the closing bell in less than two minutes. We've got Alissa Kopernik from Kopernik Global Investors joining us, as well as Robert Dye, Comerica Bank Chief Economist. But we want to go to Ines Ferre right now to take us to the big closing bell. Ines.

INES FERRE: And Adam, we are headed towards a record close for the Dow, the Dow having touched intraday highs earlier today. The S&P 500 looks like it's going to end just off of its record close from last Friday in the red territory. And then looking at the NASDAQ, the NASDAQ down more than half of a percent.

Let's check out the sector action to see where we'll end up today. We're seeing that utilities, communication services were outperforming, energy and financials underperforming. And if we just take a look at the NASDAQ 100, we can see that some of the big-cap names like Facebook lifting up communication services, up more than 2 and 1/2%. Alphabet up more than 1% today.

Taking a look at the banks to see where we'll end up with the banks, the banks today being in red territory. Wells Fargo down more than 3%. Credit Suisse down more than 11%. Morgan Stanley, 2 and 1/2%. Here's the closing bell for today, Monday.

[BELL RINGING]

SEANA SMITH: And that closes out the trading day today. Again, taking a look at where things ended, the Dow closing in the green, the lone major average there to eke out gains, closing up just around 99 points, so reversing those earlier losses. S&P and NASDAQ, though, closing in the red, the NASDAQ off just around 6/10 of a percent, S&P off about a tenth of a percent.

Ines was just going through some of the sector action for us. Utilities, communication services, and consumer staples outperforming. Energy and financials underperforming today. We're seeing energy being dragged down by the blow, really, at Archegos Capital Management, forcing the liquidation there of more than $20 billion worth of the stock. We're seeing some ripple effects through the market here, specifically some of those investment banks under pressure, Credit Suisse, one of the biggest laggards today.

So let's talk about all of this with our market panel. We have Robert Dye. And we also have Alissa Corcoran of Kopernik Global Investors. And Alissa, let me just start with you. When we talk about the implications of this, as-- as it pertains to Archegos Capital Management, how are you looking at that, just from a markets perspective when we talk about the potential ripple effects that we could see throughout the market because of this?

ALISSA CORCORAN: Yeah, I think everybody is wondering if this is the canary in the coal mine and how much it's going to ripple into not just financials, but other parts of the market. And from our perspective, the financials are risky inherently because of their leverage. And for that reason, we want a very large discount to our theoretical value before we are interested in investing in financials.

Now that applies to all the other areas that we are investing in as well. We're deep value long-term investors, so we-- we risk adjust all of our companies very relative to-- to their riskiness, especially on balance sheet. The opportunities we're finding today are mostly in commodities and emerging markets. These things are off-- are already very cheap. So it's hard to say, but your best bet for protection in these systemic events is always to just hold very inexpensive companies to begin with.

ADAM SHAPIRO: I like cheap. Robert, I'm curious, though, with the data we're going to get today-- not today, but this week as we close the quarter, by the way, first quarter comes to a close this week, which is the data point that you think is going to really have an impact on markets? Would it be the-- the housing sales prices? Or would it be the jobs figure? Or is there something else going on?

ROBERT DYE: Well, first of all, what I'd like to say is if there is a crisis brewing in short-term financials, now's a good time to have that because of the tremendous amount of liquidity that's in the system, the Fed pumping out. We've got fiscal stimulus in there. Looking ahead this month, I'm always looking at the jobs numbers. So we're coming up on jobs Friday, and so my expectation is up about a half a million jobs.

But there's a huge confidence interval around that, could be plus or minus 200,000 around that number. But everything is starting to line up with a firming job market here. Unemployment insurance claims coming down, other surveys going up. So we're back in this back-to-work rehiring open up mode, which I think bodes very well for the US economy.

SEANA SMITH: And Robert, sticking with that, as we see more states reopening, consumers will be coming back a little bit more quickly, what does this mean for inflationary pressures? And I guess, will they develop very quickly? And how long do you expect them to stay?

ROBERT DYE: Well, yeah, that's the other side of the sword on-- on that one. And so we do expect to see above trend inflationary pressure. We already know that commodity prices are going up across the board. We've got global supply chains really under tremendous strain right now. And then year-over-year effects too, so-called base effects. So we know we're going to be on the plus side of inflation here.

The Fed has view-- has already really telegraphed that it's going to be viewing inflation as a transitory event, at least in the near term, justifying keeping the Fed funds rate low, locked at the zero lower bound, at least through the end of this year and probably much longer. So I think it's going to take a while. And by a while, I mean maybe 18 to 24 months before we really get to see what the Fed stance on this is and what they do with interest rates if we do see persistent inflation down the road.

ADAM SHAPIRO: Alissa, it seems to me, though, that what you're advising your clients, especially when it comes to commodities, is about a good old-fashioned economic boom globally. And I'm not talking about Dr. Copper. You're talking about commodities like uranium. I mean, am I getting what you're telling your clients accurately? And how do I get in on it?

ALISSA CORCORAN: We are 100% bottom up. So that-- that's the first thing to-- to know about us. But the other-- to-- to comment on the inflation question, we believe that inflation is the increase in the monetary base, so that has already happened. And from our perspective, things like commodities, such as uranium, such as gold, things that are scarce will absolutely benefit from inflation.

However, we don't need inflation, we don't even need an economic recovery for these things to do very well. For example, uranium is trading at $30 a pound. It should be trading at $60 a pound, just based on very low expectations of demand. This is just to keep supply coming. Right now supply is coming off of the market, and there's not enough uranium to meet just current nuclear demand needs.

So our company hold-- our fund holds Cameco, one of the largest uranium mining companies in the world, Kazatomprom, several exploration companies that are sitting on existing uranium deposits, they just haven't mined them yet. Those are trading at an even larger discount. So-- so those are the types of things that we're investing in. We are not making any sort of top-down bet though.

SEANA SMITH: Robert, in just a couple of days, we're expecting President Biden to lay out the first part of his multi-trillion economic recovery plan. I'm curious just what you're expecting to hear from him. And I understand you kind of answered it just in terms of inflation expectations, but how big of an impact do you think this could potentially have on the economic recovery?

ROBERT DYE: Well, first of all, the big difference between stimulus and infrastructure is the stimulus gets into the economy right away. An infrastructure plan will take multiple years. I would expect to see maybe as much as a 5 or 10-year plan on the order of $2 to $3 trillion. But that's a gross amount. We're going to net some of that out when we see the tax bill that's going to follow this, because the Biden administration is going to need to pay for this in some way.

So before we see those two numbers, we really can't scope out the plan too precisely. But I think it's going to pile on the already positive stimulative effect we have from fiscal stimulus and monetary policy, and yet another reason to be bullish on the US economy through the second half of this year and into next year, and probably beyond that.

ADAM SHAPIRO: OK, we want to thank Alissa Kopernik, as well as Robert Dye. Robert's from Comerica. He's the bank's Chief Economist. And Alissa is with Kopernik Global Investors. Both of you, very much appreciate having you here.