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S&P 500 Flirts With Record, But 'Overbought' Jitters Keep Lid on Gains

Stock MarketsApr 06, 2021 02:18PM ET
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By Yasin Ebrahim

Investing.com – The S&P 500 continued to trade near record highs Tuesday, led by energy and consumer stocks, but some on Wall Street are calling for caution as the latest acceleration pushed stocks into "overbought" territory.    

The S&P 500 rose 0.1% after hitting a record high of 4,086.10, the Dow Jones Industrial Average fell 0.14%, or 46 points, the Nasdaq Composite was up 0.1%.

"Watch the S&P 500 over the next few days for potential consolidation - that benchmark is now very overbought / extended on the short-term trading charts and is likely to see some profit taking ahead in our opinion," Janney Montgomery Scott said in a note. Initial support is touted in the 3975-to-4000 zone, the firm added.

The gloomy update comes just as energy stocks, which had been battered a day earlier, found their footing as optimism over global growth remains steady. Europe, which remains in lockdowns, is expected to mount a stronger recovery.

The International Monetary Fund lifted its global growth forecast to 6% in 2021, up from its prior forecast of 5.5%, citing the ongoing progress of the vaccine deployment worldwide. The IMF forecast the euro zone to grow 4.4% in 2021. The faster roll out of vaccines in the U.S. continues to spur the reopening process, with California California Governor Gavin Newsom saying the state will lift most restrictions by June 15.

Devon Energy (NYSE:DVN), APA (NASDAQ:APA) and Diamondback Energy (NASDAQ:FANG) were among the leaders in the energy sector, with the the latter up more than 3%. 

Financials, however, failed to participate in the broader rally cyclicals, as the run up in regional banks paused. 

State Street (NYSE:STT), Bank of New York Mellon (NYSE:BK), PNC Financial Services Group Inc (NYSE:PNC) were among the laggards with just days to go until the major Wall Street banks kick off the first quarter earnings season in earnest.

"Although we expect near-term volatility as 1Q earnings start on April 14, reflecting weak loan growth, margin pressure, lower mortgage banking revenues and seasonal factors, we remain positive on the bank group," Wedbush said.

Technology stocks, were roughly unchanged, with the fab 5 trading mixed, even as falling U.S. bond yields supported investor sentiment on longer-duration growth stocks.  

The U.S. 10-year slipped below 1.7% quote yields after trading in range of 1.67% to 1.72% in recent days. 

Microsoft (NASDAQ:MSFT), Google-parent Alphabet (NASDAQ:GOOGL), Facebook (NASDAQ:FB), and Amazon.com (NASDAQ:AMZN) traded lower, while Apple (NASDAQ:AAPL) was higher.

In other news, Tesla (NASDAQ:TSLA) struggled to get going after racking up a 6% gain on Monday, as investors digested a bearish note from Roth Capital.

Roth Capital said Tesla is only worth $150 a share and suggested the electric automaker was a "minor player" in the U.S. and European markets.

S&P 500 Flirts With Record, But 'Overbought' Jitters Keep Lid on Gains
 

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