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S&P 500 Ekes Out Gain After Cutting Losses as Tech Eases Off Lows

Stock MarketsNov 23, 2021 04:51PM ET
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© Reuters.

By Yasin Ebrahim

Investing.com – The S&P 500 eked out a gain Tuesday, as cyclical sectors rallied and tech eased off session lows on dip-buying activity, though rising U.S. Treasury yields weighed on sentiment on the sector.   

The S&P 500 rose 0.17%, the Dow Jones Industrial Average gained 0.55%, or 194 points, the Nasdaq, which had fallen more than 1% during the day, closed down about 0.50%.

Tech and communications services – growth sectors of the market that tend to include stocks with higher valuation – fell out of favor as rising U.S. Treasury yields weighed on sentiment.

The selloff in tech has been driven by the “re-steepening in the yield curve as the spread between the 2-year and the 10-year Treasury yields moved back to 105 basis points in a relatively short order,” Mark Luschini, chief investment officer at Janney Montgomery Scott, told Investing.com in an interview on Tuesday.

Crowdstrike (NASDAQ:CRWD), DocuSign (NASDAQ:DOCU), Peloton Interactive (NASDAQ:PTON), Zoom Video Communications (NASDAQ:ZM), were some of the hardest hit growth names, with the latter also pressured by concerns about future growth.

Zoom Video Communications (NASDAQ:ZM) fell more than 14% after warning of a slowdown in revenue growth as the pandemic-fueled boost to user growth is expected to slow as employees return to the office.

“While we're positive on Zoom's strategic initiatives and investments in key growth areas, we find it tougher to like a stock with more sharply decelerating growth and incremental pressure on profitability,” Deutsche Bank said in a note as it slashed its price target on the Zoom to $280 from $350.

Big tech ended mixed, with Apple (NASDAQ:AAPL) and Amazon (NASDAQ:AMZN) higher, while Microsoft (NASDAQ:MSFT), Facebook (NASDAQ:FB), and Google-parent Alphabet (NASDAQ:GOOGL) ending lower. Despite the rise in yields, dip-buying in big tech is expected to continue.

“[W]hen somewhat frothy expectations build valuations up to the point where names that are among the leadership in tech are increasingly vulnerable to a pullback in their share price, [investors] should use those opportunities to add to positions if they're underweight or have established positions,” Luschini added.

Consumer discretionary also weighed on the broader market, paced by a 12% slump in Best Buy (NYSE:BBY) after the electronics retailer’s weaker-than-expected holiday comparable sales offset third-quarter results that beat on both the top and bottom lines.

Cyclical corners of the market including financials, energy and industrials racked gains amid a rotation from value to growth.

Energy jumped more than 3% as oil prices rallied despite President Joe Biden saying Tuesday the U.S. will release 50 million barrels of oil from its Strategic Petroleum Reserve in tandem with other major oil consuming countries to curb rising energy prices.

“It will take time, but before long, you should see the price of gas fall where you fill up your tank,” Biden said on Tuesday. 

 
On Monday, OPEC said it would reassess its plan to slow production cuts if major oil consuming countries move ahead with plans to tap emergency oil reserves.
S&P 500 Ekes Out Gain After Cutting Losses as Tech Eases Off Lows
 

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Comments (1)
New Jazenevd
New Jazenevd Nov 23, 2021 5:14PM ET
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The market continues uptrend no matter what, disregarding anything. Except money printing, it does matter. Also, oil price went up big, showing what the market thinks about WH fool.
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Ronald Warren
Ronald Warren Nov 23, 2021 5:14PM ET
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I guess what I was inferring, was that the ****love child of Powell's creation is coming of age. Get ready for the dump.
New Jazenevd
New Jazenevd Nov 23, 2021 5:14PM ET
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Ronald Warren  No dumps until money printing stops, and it has legs.
John Healy
John Healy Nov 23, 2021 5:14PM ET
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The Fed “prints” money through bond purchases. If the Fed truly tapers to zero, the party’s over. Bond yields are already reacting. I say JPow’s bluffing because the asset markets won’t be able to take the pressure. As has always been the case, Powell will sacrifice the consumer and taxpayer to keep housing and equities inflating.
New Jazenevd
New Jazenevd Nov 23, 2021 5:14PM ET
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John Healy  Powell buys bonds to cover up government overspending. If the latter diminishes then tapering can proceed further. Certainly, the overspending can be curtailed only if Reps win Congress in 2022, something like it happened in 2010 in Obama first term. It can repeat and in this case tapering will happen in earnest in 2023.
John Healy
John Healy Nov 23, 2021 5:14PM ET
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New Jazenevd I think there’s little to no chance that the current administration is going to reduce spending. They can’t. They’re totally backed into a corner. Even if the BBB bill is significantly reduced, the amount is going to be monstrous, and that’s in addition to the one that was just passed. Please tell me how the federal government can spend that kind of money without the Fed continuing to subsidize it. Tax revenue? That’s laughable. Inflation is the Fed’s only alternative.
 
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