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Dow Snaps 5-Day Win Streak as Tech Wreck Dents Bullish Stampede

Stock MarketsMay 10, 2021 04:04PM ET
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© Reuters.

By Yasin Ebrahim

Investing.com – The Dow cut gains to snap five-day win streak Monday, as falling tech stocks dragged the broader market lower. 

The Dow Jones Industrial Average fell 0.1%, or 35 points,  but was earlier up more than 300 points hitting an intraday record. The S&P 500 was down 1%, and the Nasdaq Composite slumped 2.6%.

The rotation from tech to economically sensitive cyclicals areas of the market continued as investors shun longer-duration growth stocks amid ongoing inflation pressures and worries about an eventual Federal Reserve.  

Google-parent Alphabet (NASDAQ:GOOGL), and Facebook (NASDAQ:FB), were downgraded to neutral from buy by Citigroup (NYSE:C) on worries that ad-revenue growth is set to wane. 

"[A]d-growth will likely decelerate after 2Q21 (on tougher comps). Historically, that usually isn’t bullish for multiples. As such, we downgrade GOOGL and FB to neutral," Citigroup said.

But others on Wall Street are not so sure that big tech has had its day in the sun.

"With worries around peak tech earnings, it's as 'good as it gets philosophy,' macro inflation/rate jitters, and work from home tailing off as vaccine deployment looks to be hitting the masses, we are seeing multiples compress across the tech sector," Wedbush said.

"However massive growth (and further multiple expansion) is still on the horizon with tech stocks underestimating this surge of demand for the next 2-3 years," it added.

As the quarterly earnings season draws to a close, investors continued to digest quarterly earnings from corporates.

BioNTech SE (NASDAQ:BNTX) reported better-than-expected profit and revenue in the first quarter, and said that there was no evidence to suggest that it would need to update its Covid-19 vaccine for emerging variants of the virus.

Tyson Foods (NYSE:TSN), reported first-quarter results on both the top and bottom lines, but flagged headwinds for its chicken business. Its shares were flat, after paring intraday losses.

Marriott International (NASDAQ:MAR) reported mixed first-quarter results as earnings beat, but revenue fell below expectations. The company did, however, tout optimism ahead, pointing to increased demand as the rollout of vaccines continues.

About 86% of S&P 500 companies that reported earnings through May 7 have beaten analysts’ estimates for earnings per share, and 76% have reported a positive revenue surprise, FactSet said. 

The retreat in stocks from session highs should be viewed as buying opportunity as the bull market still has room to go, Wells Fargo (NYSE:WFC) said. "We view any market disruptions during this seasonally weak period as a potential buying opportunity, as we believe we’re still in the early innings of the new bull cycle."

Dow Snaps 5-Day Win Streak as Tech Wreck Dents Bullish Stampede
 

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Comments (8)
Investing Man
Investing Man May 10, 2021 11:42PM ET
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What kind of bag holder will you be?
robert mandry
Rob2Trade May 10, 2021 9:07PM ET
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Trees dont grow to the sky. Markets gotta come in at some point.
Tommy Rommazontz
Tommy Rommazontz May 10, 2021 8:09PM ET
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it was a shakeout. don't be duped. Liquidity hasn't changed. Its still an asset inflationary proposition. Watch as the low fruit is snatched up tomorrow.
Tommy Rommazontz
Tommy Rommazontz May 10, 2021 8:09PM ET
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it was a shakeout. don't be duped. Liquidity hasn't changed. Its still an asset inflationary proposition. Watch as the low fruit is snatched up tomorrow.
Greg Nathan
Greg Nathan May 10, 2021 8:09PM ET
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First, the picture is ridiculous.  The DOW just hit an intraday, all-time high and this guy looks like it crashed 2000 points.  Of course there are fundamental reason for this guy's expression...  It might have something to do with the double standard for good credit where the debt to income ratio for individuals is one thing and for the US government is another...  Yes - sickening...  Secondly, if this is really an "asset inflationary proposition" gold at $1850/ounce is very cheap.  Think about it!
divad mocihc
9divaD May 10, 2021 7:19PM ET
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The markets always right and the whys don’t matter. That’s why you cut the losers quick and let the winners run. The market is related but NOT correlated to the economy.
William Bailey
William Bailey May 10, 2021 6:33PM ET
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I can smell the blood in the water !!! Fed cant print much more and debt-heroin to markets viens is running low .... exit stock stage left before being left under water for 10 years
Leonard Kong
Leonard Kong May 10, 2021 5:06PM ET
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all parts of the economy are going to rip for at least a year or two. buy the dip
William Bailey
William Bailey May 10, 2021 5:06PM ET
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What dip? Yields are gonna explode
William Bailey
William Bailey May 10, 2021 5:06PM ET
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William Bailey in bonds and thats all she wrote
Brent Bond
Brent Bond May 10, 2021 4:19PM ET
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Wells Fargo thinks we are in the early innings of a new bull cycle? Don’t you think something is amiss when the Fed moves the market and financials don’t matter anymore.
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Kayla Rahier
Kayla Rahier May 10, 2021 4:19PM ET
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why did everything plummet so low just a few minutes ago?
Kayla Rahier
Kayla Rahier May 10, 2021 4:19PM ET
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why did everything plummet so low just a few minutes ago?
Kayla Rahier
Kayla Rahier May 10, 2021 4:19PM ET
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why did everything go so low just a few minutes ago?
Nappi Boy
Nappi Boy May 10, 2021 4:19PM ET
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okay
William Bailey
William Bailey May 10, 2021 4:19PM ET
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Amiss is an understatement .... the cash needed does not exsist to keep the markets up .... I suppose the Fed could print 6 trillion and give it away to buy back stock .... but then inflation would destroy the economy relativly quickly and bond yields would explode because of risk . Print much more debt and game over . Markets will fall to the “real” GDP soon , about 17trillion . To generate a gdp big enough to get much above where the indexes sit now would need to ne 40 trillion
 
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