Tech stocks lead market losses after big rally
Stocks dropped amid a sell-off in big tech and speculation that this month's rally has outpaced prospects for an economic rebound as coronavirus cases surge. Treasurys fell.
The S&P 500 retreated from a two-month high as the slide in technology shares outweighed gains in industrial and energy companies. The Nasdaq 100 slumped as much as 2.7% on Tuesday. Amazon.com Inc. sank as the online-retail giant faced an antitrust complaint from the European Union, while American depositary receipts of Alibaba Group Holding Ltd. tumbled after China tightened the scrutiny over internet behemoths. Meanwhile, the Dow Jones industrial average outperformed as Boeing Co. extended its November rally to more than 30% on news that regulators could lift the 737 Max grounding as soon as next week. The Russell 2000 Index of small caps climbed to the highest since August 2018.
After all the enthusiasm that lifted global equities and sent havens into a tailspin, some analysts said the moves may have gone too far. The coronavirus shot still has several hurdles to clear, there's concern over fiscal stimulus, the transition of power to President-elect Joe Biden and a virus resurgence. The U.S. reported a record 142,907 new infections on Monday, and Gov. Phil Murphy, D, said New Jersey's jump in cases is "devastating." Despite the uncertainties, the S&P 500's valuations are near the highest levels since the dot-com era.
"You still have a tremendous amount of uncertainty out there, and while equities may continue to climb a wall of worry, the stock market is still subject to the rules of gravity," said Jonathan Boyar, managing director at Boyar Value Group.
With the Nasdaq Composite Index down for a second straight session, an ominous double-top pattern is forming. That should put all eyes on the 50- and 100-day moving averages as the first and second line of support for the tech-heavy gauge. Megacaps extended the slide that accompanied Monday's rotation out of pandemic favorites and into value stocks, and potentially setting up a test of the 11,000 level around the 100-day line.
Meanwhile, China unveiled regulations to root out monopolistic practices in the internet industry, seeking to curtail the growing influence of corporations like Alibaba and Tencent Holdings Ltd. The rules, which sent both stocks tumbling and sparked a wider sell-off in the nation's equities, landed about a week after new restrictions on the finance sector that triggered the shock suspension of Ant Group Co.'s $35 billion initial public offering.
These are some of the main moves in markets:
Stocks
- The S&P 500 Index dropped 0.2% at 4 p.m. EST.
- The Stoxx Europe 600 Index increased 0.9%.
- The MSCI Asia Pacific Index decreased 0.1%.
Currencies
- The Bloomberg Dollar Spot Index was little changed.
- The euro was little changed at $1.1811.
- The Japanese yen strengthened 0.1% to 105.30 per dollar.
Bonds
- The yield on 10-year Treasurys gained three basis points to 0.96%.
- Germany's 10-year yield rose two basis points to -0.49%.
- Britain's 10-year yield climbed three basis points to 0.401%.
Commodities
- The Bloomberg Commodity Index gained 1.7%.
- West Texas Intermediate crude increased 2.7% to $41.39 a barrel.
- Gold strengthened 0.8% to $1,877.15 an ounce.
