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S&P 500 Cuts Losses as Tech Selloff Eases, Cyclicals Shine

Stock MarketsNov 24, 2021 11:48AM ET
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© Reuters

By Yasin Ebrahim

Investing.com – The S&P 500 cut losses 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 fell 0.36%, the Dow Jones Industrial Average gained 0.20%, or 70 points, the Nasdaq, which fell more than 1%, was down about 0.6%.

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 15% 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 including – Facebook (NASDAQ:FB), Google-parent Alphabet (NASDAQ:GOOGL), Amazon (NASDAQ:AMZN), Microsoft (NASDAQ:MSFT) and Apple (NASDAQ:AAPL) – was also caught up in the rising rate storm,  but are expected to be bought on the dip.

“[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 Cuts Losses as Tech Selloff Eases, Cyclicals Shine
 

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Comments (5)
Miles Mathewson
Miles Mathewson Nov 23, 2021 4:44PM ET
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BABA is the only buy in the market right now
Stan Smith
Stan Smith Nov 23, 2021 4:07PM ET
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Phew!!!...thanks FED.  Now, about that tapering thing....
Jokers R Us
Jokers R Us Nov 23, 2021 3:57PM ET
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Here's to anyone who says we have a free market in this country
Empire Destroyer
Empire Destroyer Nov 23, 2021 3:57PM ET
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You have democracy so you free... what more you want?
Stephen Fa
Stephen Fa Nov 23, 2021 3:57PM ET
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Democracy is an illusion now. The only hope is US Congress term limits and radical campaign finance laws to reduce transparent corruption.
Mitchel Pioneer
Mitchel Pioneer Nov 23, 2021 3:45PM ET
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The most prolific headline in internet history, "stocks reverse losses," as the US Ponzi Scheme, greatest financial fraud in history, and biggest investment JOKE in the world miraculously recovers again "in late trade," flagrant as ever.   Assume the position America.
Miles Mathewson
Miles Mathewson Nov 23, 2021 3:45PM ET
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Talking about Tesla?
Marco cuevas
Marco cuevas Nov 23, 2021 2:48PM ET
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Not a single comment except for mine  because nobody cares about a rigged market.
NUNO LOUREIRO
NUNO LOUREIRO Nov 23, 2021 2:48PM ET
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Stumbles... And 20 minutes later is green, what a joke
Empire Destroyer
Empire Destroyer Nov 23, 2021 2:48PM ET
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🤣🤣
 
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