Stocks dropped amid a selloff in big tech and speculation that this month’s rally has outpaced prospects for an economic rebound as coronavirus cases surge. Treasuries fell.
The S&P 500 retreated from a two-month high as the slide in technology shares outweighed gains in industrial and energy companies. The Nasdaq 100 slumped as much as 2.7 per cent on Tuesday. Amazon.com Inc. sank as the online-retail giant faced an antitrust complaint from the European Union, while American depositary receipts of Alibaba Group Holding Ltd. tumbled after China tightened the scrutiny over internet behemoths. Meanwhile, the Dow Jones Industrial Average outperformed as Boeing Co. surged on news that regulators could lift the 737 Max grounding as soon as next week. The Russell 2000 Index of smaller companies climbed 2 per cent.
After all the enthusiasm that lifted global equities and sent havens into a tailspin, some analysts said the moves may have gone too far. The coronavirus shot still has several hurdles to clear, there’s concern over fiscal stimulus, the transition of power to President-elect Joe Biden and surging virus cases. The U.S. reported a record 142,907 new infections on Monday, and Governor Phil Murphy said New Jersey’s jump in cases is “devastating.” Despite the uncertainties, this month’s rally in the S&P 500 put its valuations near the highest levels since the dot-com era.
“You still have a tremendous amount of uncertainty out there, and while equities may continue to climb a wall of worry, the stock market is still subject to the rules of gravity,” said Jonathan Boyar, managing director at Boyar Value Group.
With the Nasdaq Composite Index down for a second straight session, an ominous double-top pattern has formed. That should put all eyes on the 50- and 100-day moving averages as the first and second line of support for the tech-heavy stock gauge. Megacaps extended the slide that accompanied Monday’s rotation out of pandemic favorites and into value stocks, and potentially setting up a test of the 11,000 level around the 100-day line.
Meanwhile, China unveiled regulations to root out monopolistic practices in the internet industry, seeking to curtail the growing influence of corporations like Alibaba and Tencent Holdings Ltd. The rules, which sent both stocks tumbling and sparked a wider selloff in the Asian nation’s equities, landed about a week after new restrictions on the finance sector that triggered the shock suspension of Ant Group Co.’s US$35 billion initial public offering.
These are some of the main moves in markets:
Stocks
The S&P 500 fell 0.2 per cent as of 2:57 p.m. New York time.
The Stoxx Europe 600 Index increased 0.9 per cent.
The MSCI Asia Pacific Index was little changed.
Currencies
The Bloomberg Dollar Spot Index dipped 0.1 per cent.
The euro climbed 0.1 per cent to US$1.182.
The Japanese yen was little changed at 105.33 per dollar.
Bonds
The yield on 10-year Treasuries increased three basis points to 0.96 per cent.
Germany’s 10-year yield rose two basis points to -0.49 per cent.
Britain’s 10-year yield climbed three basis points to 0.401 per cent.
Commodities
The Bloomberg Commodity Index gained 1.7 per cent.
West Texas Intermediate crude increased 2.3 per cent to US$41.21 a barrel.
Gold strengthened 0.7 per cent to US$1,876.70 an ounce.
