Wall Street Humbled as Fast-Reversing Markets Confound the Pros

With inflation up, economic growth down and two-year Treasury yields testing 5%, Bill Gross sensed the music in markets was fading, and said it was time to get over the likes of the Magnificent Seven.

“Stick to value stocks,” the Pacific Investment Management co-founder posted Thursday morning on X, formerly known as Twitter. “Avoid tech for now.”

Just a day later, the tech-heavy Nasdaq Composite Index notched its best session since February after Microsoft Corp. and Alphabet Inc. showed the AI earnings bonanza still has juice.

It’s the latest gut-check for anyone trying to get a handle on the short-term moves of markets, just as new questions emerge about the viability of an economic soft landing. An ETF riding the momentum trade shot up 3.5% this week, after plunging 5.6% in the previous week.

Macro signals continue to confound. Growth eased more than expected, a report showed Thursday, yet indicators of consumption and investment remain constructive. A day later strong personal-spending data was duly cheered by economic bulls, while raising the eyebrows of inflation hawks.