The persistent weakness of technology stocks kept major indices under pressure on Monday after last week’s inflation readings hotter than expected caused a stock market crash.
The Dow Jones industrial average fell 60 points as Home Depot and Boeing measured the blue-chip index. The S&P 500 lost 0.3% while the technology sector retreated by more than 1%. The Nasdaq Composite fell by 0.7%.
Big Tech was quickly under pressure to start the week, with Apple and Facebook down 0.8%, Netflix down 1% and Google’s Alphabet down 0.6%. In recent weeks, traders have punished the technology sector amid a wider shift from inventory growth to cyclical, reopening of energy, finance and materials stores.
Shares of communications services Discovery and AT&T supported the trend, both news of the merger agreement. AT&T announced on Monday that it did in advanced conversations merge WarnerMedia, which includes HBO, with Discovery. The new entity will trade as its public company.
Discovery’s Class C inventories rose 17.3%, while AT&T added about 4%.
“Investors should prepare for a further surge in volatility, driven by inflation data, along with other risks, such as a stalemate in tackling the pandemic,” said Mark Haefele, UBS’s chief investment officer. “But we see no concern about inflation that will end the stock set, which we expect to be driven by cyclical market segments as the global economic opening expands.”
Wall Street came out of one of the craziest weeks of 2021 when the S&P 500 fell 4% in the middle of the week amid heightened fears of inflation. Broad reference capital eventually recovered and ended the week by just 1.4%.
The technically heavy Nasdaq Composite, particularly affected by fears of inflation, fell 2.3% last week. Blue Dow Dow fell 1.1% in the period. All three benchmarks announced the worst week since February 26th.
“Not only are they [last] weekly events are a warning sign of how unpleasant footprints of inflation can become, but also a warning sign of how overcrowded stock markets have become, ”Nikolaos Panigirtzoglou, CEO of JPMorgan, said in a note.
Data from last week showed a consumer price index jumped 4.2% from a year earlier in April, the fastest rate since 2008, which has heightened fears that the Federal Reserve could start forcing a light monetary policy if higher price pressures are maintained.
The Fed’s minutes from the last meeting, which will be released on Wednesday, could provide some clues to policymakers’ thoughts on inflation.
Bitcoin was taken on a wild ride overnight on Sunday. Earlier, the price fell below $ 43,000 after Elon Musk hinted on Twitter that Tesla may have dumped his bitcoin. Last week, Tesla said it would no longer accept bitcoin to buy cars due to environmental concerns.
Bitcoin was then rejected, after Musk later clarified in a tweet that he was a manufacturer of electric vehicles. “did not sell any Bitcoin. “The last time it was $ 45,505. Tesla shares lost 1.5%.
By the way, the earnings season in the first quarter ends with more than 90% of S&P 500 companies reporting their results. So far, 86% of S&P 500 companies have reported a positive EPS surprise, which would mark the highest percentage of positive earnings surprises since 2008 when FactSet began tracking this metric.
Walmart, Home Depot and Macy’s earnings will deliver on Tuesday.
“Investor and stock analyst reactions to earnings results reveal skepticism that first-quarter beats are a reason for further forward-looking optimism,” wrote David Costin, chief U.S. stock strategist at Goldman Sachs. “Firms that beat EPS estimates typically exceed the S&P 500 by 100 [basis points] day after registration. However, the typical stocks that beat EPS this quarter topped just 51 [basis points], continuing the trend from 2020. “
Become a smarter investor with CNBC Pro.
Get stock selection, analyst calls, exclusive interviews and access to CNBC TV.
Sign in to get started a free trial today