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S&P 500 Closes Lower, But Tech Shows Signs of Life on Dip-Buying

Stock MarketsMay 11, 2021 04:02PM ET
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© Reuters.

By Yasin Ebrahim

Investing.com – The S&P 500 closed lower Tuesday, but tech stocks showed signs of life as investors swooped in to take advantage of the recent rout, keeping a lid on further downside in the broader market.    

The S&P 500 closed down 0.87% but had been down about 2% at the lows of the day. the Dow Jones Industrial Average fell 1.36%, or 473 points, and  the Nasdaq Composite was down 0.09%, but had been down more than 2%. 

Beaten-down tech stocks popped up on investors' shopping lists, pushing the "Fab 5" off the lows of the day.

Google-parent Alphabet (NASDAQ:GOOGL), Apple (NASDAQ:AAPL), Facebook (NASDAQ:FB) Amazon.com (NASDAQ:AMZN) and Microsoft (NASDAQ:MSFT) traded well above their session lows.  

Tesla (NASDAQ:TSLA) was a drag on the tech-heavy Nasdaq, slipping more than 1% after reports that its April sales in China slumped 27%, according to a Bloomberg report, citing China's Passenger Car Association. The electric automaker also suspended plans to expand its gigafactory in Shanghai, China, amid rising US-China tensions. 

But the dip-buying in these megacap stocks may not have staying power as frothy valuations remain a concern.   

"The popular areas of the market like big tech and growth stocks reported strong quarterly earnings, but the reactions [in their stock prices] afterwards still wasn't enough [to sustain a move higher], partly because their valuations are pretty high," George Cipolloni a portfolio manager of Penn Mutual Asset Management said in an interview with Investing.com on Tuesday.  

The rally in cyclicals, meanwhile, took a breather as investors hit pause on the reopening trade.

Energy fell more than 2%, despite a rebound in oil prices as concerns about U.S. refiners cutting demand continue to linger following reports the country’s largest fuel pipeline, Colonial Pipeline, will not be fully operational for the rest of the week.

Segments of the pipeline are being "brought back online in a stepwise fashion... based on a number of factors with safety and compliance driving our operational decisions, and the goal of substantially restoring operational service by the end of the week,” Stifel said, citing company officials.

Industrials were dragged lower by airlines, with Alaska Air Group Inc (NYSE:ALK), American Airlines Group (NASDAQ:AAL) and United Airlines Holdings Inc (NASDAQ:UAL) closed down about 2%.  

Still, market participants continue to back cyclicals against tech pointing to ongoing expectations for a robust recovery.   

"If we do get a follow through with economic growth, healthy inflation, and slightly higher interest rates, I think all those factors are in their [value sector] favour," Cipolloni added.

On the earnings front, investors had to contend with the mixed quarterly results from corporates.

Palantir Technologies (NYSE:PLTR) jumped more than 9% after reporting first-quarter earnings that topped Wall Street expectations as revenue surged 49% in the quarter.

Virgin Galactic Holdings Inc (NYSE:SPCE) cut losses to close up 1% despite reporting wider first-quarter losses, and flagged wear-and-tear issues for its Eve mothership that could delay its next test flight, which was slated for this month.

Roblox (NYSE:RBLX) delivered first-quarter results that fell short of estimates but signs that gaming activity remains robust on the platform even as the economic reopening gathers pace sent its shares more than 21% higher.

On the pandemic front, the U.S. Federal Drug and Food Administration authorized the Pfizer-BioNTech vaccine for use in children aged 12 to 15.

Vaccinating children will allow states to resume in-person learning in schools, paving the way for a further reopening of the economy.

S&P 500 Closes Lower, But Tech Shows Signs of Life on Dip-Buying
 

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Comments (11)
Mike Chen
Mike Chen May 11, 2021 9:54PM ET
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Biden administration will make America great again. Money can settle everything! Spending and taxing is the only way to boost up the economy. Make money in stonks, paychecks and spend them. Pandemic will be over this year.
TL Chan
TL Chan May 11, 2021 7:55PM ET
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The unemployment benefit will ceases in September, wage hike is illusionary, supply crunch is definitely short lived, people are illusionary, reopening is and will be fine in US. The only problem is CCP China inflation, because suddenly CCP is so du*p to inflict the inflation to themselves, this is really unexpected. However, the good view is we might have a short term pain for a while, but in the long run, their supply chain crumbling is determined, with a faster pace of decoupling, we could be out of trough faster, it can be a good thing, why suffer so much to deal with those sc*m of sc*m, tra*h of tra*h? Better keep our dignity and gravitas! We should be happy that it is more clearer what we should be doing, what is the right thing to do cannot be even more clearer.
TL Chan
TL Chan May 11, 2021 7:43PM ET
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What is the point of buy the dips of tech when CPI will be out tomorrow to drag them down again. Do those people have br**n?
Kingy Yu
Kingy Yu May 11, 2021 7:43PM ET
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Could be shor covering in case suprise data
William Bailey
William Bailey May 11, 2021 6:50PM ET
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Wait til Fed burns through all their instraments .... then no QE... Then print non-debt cash til we cant but a loaf of bread
William Bailey
William Bailey May 11, 2021 6:04PM ET
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Wow, Fed buying on dip!!!
Atlantic Coast Money
Atlantic Coast Money May 11, 2021 6:04PM ET
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The only way ARKK could get out of the double digits. Fed, Elon, and Cathie sitting in the tree k-i-s-s-i-n-g.... disgusting. Pre-market was about to create an Archegos on steroids. PPT and Enron Musk to the rescue!
Mitchel Pioneer
Mitchel Pioneer May 11, 2021 6:01PM ET
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Another criminal magic show in the US Ponzi Scheme, greatest financial fraud in history, and biggest investment joke in the world.
Investing Man
Investing Man May 11, 2021 5:42PM ET
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People who bet against america always lose and always will.
New Jazenevd
New Jazenevd May 11, 2021 4:54PM ET
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Senile fool in wh inflicts lot of harm on this country, esp. long term harm. However, market, esp. in short term performs ok. It is the main recipient of new “liquidity” aka cash, freshly printed or just produced digitally. Every dip is a buying opportunity; dem party will continue printing as long as it holds power.
Chris Hall
Chris Hall May 11, 2021 4:54PM ET
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Trump Cultist Are The Downfall of society
Scot House
Scot House May 11, 2021 4:54PM ET
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Chris Hall another liberal preaching inclusiveness unless you have different political views.
Mohd Shukor
Mohd Shukor May 11, 2021 4:27PM ET
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It's a normal correction for most of the indices, the nive in Dollar index and USDJPY will influence the move of indices
Irene May
Irene May May 11, 2021 4:15PM ET
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Stocks down? Better print another trillion dollars! Keep printing until the middle class is eliminated and cost of living is so high that everybody has no choice but to work in the gulags!
Chris Hall
Chris Hall May 11, 2021 4:15PM ET
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middle class has been dead since the 80s
Charles Eugene
Charles Eugene May 11, 2021 4:13PM ET
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Stocks down? Better hyperinflate the currency some more! Keep devaluing the dollar until cost of living goes up so much there is no more middle class and everybody is working in gulags!
 
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