Wall Street Rally Pauses As Big Tech Loses Steam

Wall Street Rally Pauses As Big Tech Loses Steam

Via Reuters:

The S&P 500 and the Nasdaq edged slightly lower on Wednesday as big tech stocks slid amid an ongoing rotation of portfolio holdings that gave a boost to energy shares and kept the overall market near record highs.

Stocks shrugged off remarks by Federal Reserve Chairman Jerome Powell, who reassured investors that interest rates will remain low for some time to spur the economy and jobs growth, but provided no new insights on monetary policy.

A change in market leadership is underway with the focus on big tech easing and sectors such as energy and financials gaining traction, said David Bahnsen, chief investment officer at The Bahnsen Group in Newport Beach, California.

“Is the whole market still reliant on big tech as it clearly was last summer? I think the answer is increasingly becoming ‘No,’ you’re seeing a broadening of market leadership,” Bahnsen said. “You have over 75% of the S&P 500 trading above its 200-day moving average. That’s remarkable breadth.”

The S&P 500 and Nasdaq both opened at record highs but soon drifted lower, while the Dow set a new peak during the session.

A wave of selling in high-riding Tesla Inc, down 5.3%, and declines of less than 1% in Amazon.com Inc, Microsoft Corp and Apple Inc, pulled the Nasdaq down and weighed the most on the S&P 500.

The consumer discretionary index fell 0.9%, while information technology slid 0.2%. On the upside, energy gained 1.8% and communication services rose 0.6%.

Powell is reiterating the Fed’s stance on staying with current rates until there is sustained inflation, said Jason Pride, chief investment officer for Private Wealth at Glenmede in Philadelphia.

“I don’t think anything coming out there is surprising,” Pride said.

The Russell 1000 value index, which is heavily weighted toward cyclical sectors, rose 0.2%, while its growth index, comprising large tech companies, fell 0.1%.

Shares of cannabis companies soared as the Reddit forum that pushed GameStop to record levels late last month extended a months-long rally on bets of decriminalization under the administration of President Joe Biden.

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