Stocks Pull Back From Record Highs, Techs Outperform
4:11 pm Tuesday, September 07th, 2021
US stocks retreated from their record highs on Tuesday, falling amid a dampened economic outlook due to the continued spread of the COVID-19 Delta variant.
There remains talk about how the market is overbought and due for a pullback as it heads into a period where analysts are forecasting slower growth due to the Delta variant and tougher year-over-year comparisons. In related news, Goldman Sachs lowered its Q4 and 2021 GDP forecasts, and the enhanced unemployment benefits expired over the extended weekend.
Accordingly, the Russell 1000 Value Index, which is composed of many cyclical stocks, is down 0.8%. Futures contracts for WTI crude and copper were down more than 1.0%. Eight of the 11 S&P 500 sectors are trading lower, including industrials (-1.7%) at the bottom of the pack.
The health care sector (-0.8%) is struggling after Morgan Stanley downgraded Johnson & Johnson (JNJ), Amgen (AGMN), and Merck (MRK) to Equal-Weight from Overweight.
Conversely, the information technology (+0.2%), communication services (+0.5%), and consumer discretionary (+0.5%) sectors are the only sectors trading higher, as investors take some shelter in the market’s largest stocks.
Apple (AAPL), Amazon.com (AMZN), Alphabet (GOOG), Facebook (FB), Tesla (TSLA), MasterCard (MA), and Netflix (NFLX) were providing heavy support.
Elsewhere, the Treasury market could be seen as an indicator for growth optimism given the rise in longer-dated Treasury yields, especially after China reported better-than-expected import and export data for August.
Reports, however, are suggesting that the move is based more on speculation that the ECB could signal tapering asset purchases on Thursday. In addition, yields are still low on an absolute basis, with the 10-yr yield trading at 1.37%, or five basis points above Friday’s settlement. The U.S. Dollar Index is up 0.5% to 92.49.
