Dow Drops Over 1% on Market's Second Straight Day of Losses

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That makes back-to-back losing sessions for the market on Tuesday, but this time the Dow got the worst of it with a plunge of well over 1%. Tech actually had a late-day rally that nearly brought the beleaguered NASDAQ to breakeven… but not quite.

Tech may be out of favor at the moment given concerns of rising inflation and a frothy market, but a lot of the big stocks from the space found some buyers later in the session. Names like Apple (NASDAQ:AAPL), Tesla (NASDAQ:TSLA) and Amazon (NASDAQ:AMZN) bounced after hitting their 200-days. AMZN finished with a gain of more than 1%, as did fellow FAANG Netflix (NASDAQ:NFLX, +1.7%).

As a result, the NASDAQ plunged over 2% at one point on Tuesday, but rallied in the second half and finished lower by only 0.09% (or about 12 points) to 13,389.43. The index dropped more than 2.5% just yesterday, so it was spared a more than 4% rout in two days. Meanwhile, the S&P slipped another 0.87% to 4152.10, following a 1.04% dip on Monday.

The Dow has been the beneficiary of the rotation out of tech, but it just couldn’t get it together today. The index slipped 1.36% (or about 473 points) to 34,269.16, which marked its first drop of more than 400 points since late February. It was up 2.7% last week after hitting record closes in the final three sessions, but it’s been in a sluggish mood of late.

“Rough start to the week. If you’re like me and took a couple hits, its time to get your head right and have a green day tomorrow. Time to tighten things up, stay nimble and not permit draw downs,” said Jeremy Mullin in today’s Counterstrike.

Inflation seems to be the market’s favorite topic at the moment, and it will take centerstage tomorrow when the consumer price index for April is released. It’s expected to show a huge gain and could be a factor in tomorrow’s trading. We'll also be getting earnings reports from well over 100 companies on Wednesday.

Today's Portfolio Highlights:

Stocks Under $10: The market doesn't like technology right now, so Brian decided to take a few of those names off the table on Tuesday and cash in a couple double-digit winners. He sold Himax Technologies (NASDAQ:HIMX) for 31.8% in less than four months and Extreme Networks (NASDAQ:EXTR) for a 16.8% return in two months. Immersion Corp. (NASDAQ:IMMR) was also sold for a loss. The editor immediately filled one of those opened spots today by adding office products company Acco Brands Corp. (ACCO). The company has beaten the Zacks Consensus Estimate in each of the last four quarters and has an “awesome” valuation. Rising earnings estimates for this year and next have made ACCO a Zacks Rank #2 (Buy). Learn a lot more about today’s moves in the complete commentary. In other news, this portfolio has the best performer among all ZU names over the past 30 days as GT Biopharma (GTBP) soared 44.6%. It also has the third biggest mover in that time with Cross Country Healthcare (NASDAQ:CCRN, +30.3%).

Surprise Trader: The retailers are coming! Dave might be picking up some big box stores in the days ahead, but he’s going out West for the season’s first pick. Boot Barn (NYSE:BOOT) is a Zacks Rank #2 (Buy) lifestyle retail chain devoted to western and work-related footwear, apparel and accessories. The company has a positive Earnings ESP of 20.46% for the quarter coming after the bell tomorrow. The editor added BOOT on Tuesday with a 12.5% allocation, while also selling Avnet (NASDAQ:AVT) for a small loss. See the complete commentary for more on today’s action. By the way, this portfolio had the best performer of the day as home fitness equipment maker Nautilus Group (NYSE:NLS) rose 9.9% after a strong quarterly report.

TAZR Trader: Amid all the NASDAQ craziness on Monday, Magnite (MGNI) was reporting a solid quarter with the top and bottom lines both improving solidly on a year-over-year basis. This provider of a sell-side advertising platform hasn’t done much since being re-added back in late March, but the portfolio did pull a 25% profit out of this name earlier in the year. Kevin still likes MGNI and used today’s pullback to add more to the position. Read the full write-up to learn what the analysts are saying about MGNI and to get an update on The Trade Desk (NASDAQ:TTD).

Zacks Short Sell List: Two names were swapped out in this week's adjustment. The portfolio short-covered Southwest Airlines (NYSE:LUV, +2.05%) and T-Mobile US (NASDAQ:TMUS). The new buys that replaced these names were Chegg (NYSE:CHGG) and China Lodging Group (HTHT). Learn more about this emotion-free portfolio that takes advantage of falling and volatile markets by reading the Short Sell List Trader Guide.

Headline Trader: "Investors are doing a quarterly reassessment of their holdings at these frothy levels and are making the proper reallocations. Since November, we have been experiencing this rotation from tech to cyclicals, with growth consolidating and value stocks driving the market higher.

"Many analysts and investors are convinced that this trend will continue despite today's minor reversal, but I remain skeptical. Many of these value names already sit at stretched levels.

"The price drops we see across the public equity market create a much more attractive setup for fresh capital than what we were looking at a couple of weeks ago. Everyone is hunting for a bottom, and that is what drove the tech bid today. Investors and traders (specifically this new cohort of retail traders) are always looking for a reason to buy up exciting innovation names." -- Dan Laboe

All the Best,
Jim Giaquinto