After a Monday rally that pushed stocks near record highs, the market is falling Tuesday as investors sell off the buzzy technology stocks that led a massive pandemic rally, and analysts are concerned the market could be topping out as the broader economy picks back up, forcing the government to ease up on its unprecedented relief measures.
Shortly after the market open, the Dow Jones Industrial Average fell 70 points, or 0.2%, to 34,042 points, and the S&P 500 shed 0.5%, while tech-heavy Nasdaq, which has largely underperformed this year despite reaching a new peak last month, tumbled 1.1%.
A slew of mega-cap tech firms are pushing the market down Tuesday, with Tesla, Apple and Facebook down close to 1.5% apiece after a “sudden” slump in pre-market trading around 7:30 a.m. EDT, Vital Knowledge Media Founder Adam Crisafulli said in a morning note.
Pointing to lackluster responses to big-teach earnings that smashed expectations (including Apple falling 0.1% after a blowout report Wednesday), Crisafulli said the “main problem” in the market is ongoing weakness in tech, as investors continue to sell off shares after “chasing” the sector’s massive rally last year.
Though it beat expectations with its late-Monday earnings report, shares of fertilizer-maker Mosaic are heading up losses in the S&P, sinking more than 7%, after the company posted net income of $157 million on revenue of $2.3 billion—and a slew of accounting losses that pushed earnings down by $77 million.
Even apparel-maker Under Armour, which hiked its full-year outlook Tuesday morning thanks to resurgent consumer demand, is falling 4% after a better-than-expected earnings report, as analysts laser in on a $9 million settlement with the SEcurities and Exchange Commision over misleading accounting practices.
“Investors didn’t pay much attention to the sell-in-May adage yesterday, but with stocks hovering around all-time highs, the market is starting to look as if it might be topping,” Oanda Analyst Sophie Griffiths said in a morning note, adding that “lackluster trading” should be expected after the recently rally. “Given the particularly strong run-up from November to April, investors could begin to see this as a good time to reduce exposure.”
What To Watch For
The monthly jobs report comes out Friday, and economists are expecting that the labor market added a staggering 1 million jobs last month. Crisafulli says that the Federal Reserve is “very likely” to change its messaging if the Friday report is “anywhere close” to consensus estimates, and if recent market reactions are any indication, investors will likely be spooked if the Fed starts to indicate it may ease up on its unprecedented economic support.
Shares of crypto exchange Coinbase, which has been trading publicly for less than one month, are down 2% Tuesday, pushing the stock down 15% from a high less than two weeks ago. The company’s market capitalization—of roughly $55 billion—is now just about half of what it was at its peak.
In the face of booming consumer demand lifting imports, the international trade widened to a record high of $74.4 billion in March, up $3.9 billion from February, according to data released Tuesday by the U.S. Census Bureau. March exports jumped 6.6% month over month to $200 billion. Reflecting the pandemic recovery, the goods and services deficit increased $83.2 billion, or 64%, year to date, compared to the same period in 2020.