Stocks Continue to Tank: Tech Stocks See Heavy Pressure
3:05 pm Monday, May 09th, 2022
Stocks sank in a widespread rout amid concern about the Federal Reserve’s ability to tame decades-high inflation without throwing the economy into a recession.
While the S&P 500 energy sector (-6.3%), undercut by lower oil prices, is the weakest performer with a 6% decline, the information technology sector (-3.1%) is the biggest drag on the market amid weakness in the large growth stocks. The consumer staples sector is bucking the negative trend with a 0.3% gain.
There isn’t a specific catalyst driving the losses, and the price action isn’t all that panicky, either. Presumably, the market is being pressured by downside momentum, a risk-off mindset amid fear of steeper declines, and lingering growth concerns related to rising rates, Russia’s war in Ukraine, and China’s COVID lockdowns.
Note, the 5% decline in oil prices follows a Bloomberg report indicating that Saudi Arabia cut oil prices for Asian buyers due to weak demand resulting from coronavirus-related lockdowns in China.
Regarding interest rates, the 10-yr yield hit 3.20% prior to the open, but it’s since backtracked to 3.08% (down four basis points) as investors seek safety in Treasuries. The 2-yr yield is down six basis points to 2.61%. The U.S. Dollar Index was down 0.2% to 103.45.
In the growth-stock space, Uber (UBER) was down 7.5% amid news that it’s planning to cut costs, Palantir (PLTR) was down 20% on disappointing revenue guidance, and Rivian (RIVN) was down 18% amid a report from CNBC indicating that Ford Motor (F) and an unknown seller through JPMorgan plan to sell shares of the company.
Today’s economic data was limited to Wholesale Inventories for March, which increased 2.3% m/m in March (Briefing.com consensus 2.3%) following a revised 2.8% increase (from 2.5%) in February.
