(May 4) The major averages fell on Tuesday, following a strong start to May, with technology stocks experiencing the biggest selling pressure.
The Dow Jones Industrial Average lost 90 points. The S&P 500 fell 0.5%. The tech-heavy Nasdaq Composite was the hardest hit, dropping 0.9%.
Apple, Tesla and Alphabet were all down 1% shortly after the open.
Bank stocks rally.
Countering that move were stocks rising on strong earnings. Pfizer shares rose 1% in premarket tradingafter posting quarterly resultsthat beat expectations and raising its 2021 guidance. CVS Health shares jumped 3% after the pharmacy chain and insurance companyalso raised its guidance.
United States Steelmoved 3% higher in premarket trading after Credit Suisseupgradedthe stock to outperform from underperform, saying that the surge in prices for steel made it clear that the industry was in a “super cycle.”
The move in futures occurred as investors jockeyed to pick which shares to ride and which shares to dump from here with the market at all time highs. Investors are torn between playing the reopening with shares like retailers or continuing to bet on Big Tech, which just reported blockbuster earnings.
“The whole thing to me is this amazing leadership problem,” Frank Gretz, a technical analyst at Wellington Shields, told CNBC. “There were 2,800 stocks up on the New York Stock Exchange yesterday, but it was hard to make money. That’s a very unusual pattern. It’s just the difference between these reopen stocks versus the tech stocks.”
The move in futures followed solid gains for the Dow on Monday as piled into shares that would benefit the most from an economic reopening. The 30-stock benchmark rallied more than 200 points, while the S&P 500 inched up 0.3%. Retail stocks led the market advance with Gap and Macy’s rallying more than 7%. Dillard’s rose nearly 10%, while Urban Outfitters and Kohl’s both gained more than 5%.
“Buying activity picked up within industrials, Boeing and Delta saw heavy trading activity as investors may be taking advantage of depressed pricing and banking on reopenings,” said Chris Larkin, managing director of trading and investing product at E-Trade Financial.
States continued to relax pandemic restrictions amid the vaccine rollout. New York Gov. Andrew Cuomo announced that most capacity restrictions will be lifted across New York, New Jersey and Connecticut, while 24-hour subway service will resume in New York City later this month.