WWe have witnessed a sudden massacre in major US tech stocks; Apple (-3.54%), Amazon (-2.2%), Microsoft (1.62%), Alphabet / Google (-1.55%), Facebook (-1.31%) and other related companies with tech / growth like Tesla (-1.65%) and semiconductors (-1.69% on the iShares PHLX Semiconductor ETF), which led the Nasdaq 100 to record its worst daily loss of -1.85% to 13,544 in the last six weeks from 18 March.
Cyclical and price-related stocks provided support to prevent the US stock market from “torpedoing” into the deep red sea, which helped the Dow Jones Industrial Average squeeze a small gain of + 0.06% to 34,133 and cut an early -1.5 loss. %. downgraded the S&P 500 to -0.67% to 4,164. The small-cap Russell 2000 was down -1.28% to 2,248 shares. The top gainers were commodities + 1.04%, finance + 0.7% and industry + 0.41%, based on 11 S&P sectors.
Overall, there was no clear catalyst that triggered a sell-off in technology and growth-related stocks; The Nasdaq 100 fell 0.86% on yesterday’s opening and traded a -1.76% drop after the first hour of the US session ahead of Treasury Secretary Yellen’s previously recorded commentary at the Atlantic Future Economic Summit that interest rates may need to rise over time to keep the US economy from overheating, and conversely, the yield on 10-year US Treasuries fell -2 basis points to 1.59%.
How about “peak growth” combined with the risk of a new spike in global COVID 19 cases caused by a muted strain from India? There was no clear rationale for such stories either, as other indicators of growth, such as oil prices, remained stable; WTI crude oil futures even posted a + 1.9% gain to $ 65.70 a barrel at the close of yesterday’s US session, his best one-day gain in three weeks since April 14. At the same time, copper futures were virtually unchanged at -0.15%.
Therefore, yesterday’s move in technology / growth is likely to be related to profit taking rather than the start of a serious risk contagion. with reported first-quarter earnings from major tech companies that drove the Nasdaq 100 to + 5.9% monthly gain in April, which outperformed other major US stocks and posted the best monthly return in the past five months since November 2020.
In terms of technical analysis, there is also a bright spot as yesterday’s sell-off of the Nasdaq 100, which hit an intraday low of 13,396, was able to stop just above the 50-day moving average ascending that acts as support at 13.335.
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