Wall Street Pulls Back, Weighed Down By Tech

NEW YORK: Wall Street retreated on Tuesday as investors shifted away from mega-cap growth stocks, but the sell-off eased following reassurances from U.S. Federal Reserve Chairman Jerome Powell.

All three major U.S. indexes were in the red, driven by declines in market-leading tech and tech-adjacent companies which drove the rally that had pushed indexes to record levels despite economic lockdowns.

“A lot of the ‘pandemic plays’ that saw outsized growth are going to see a slowing of that growth,” said Tim Ghriskey, chief investment strategist at Inverness Counsel in New York. “But I don’t think it’s going to go away.”

“Growth doesn’t stop after the pandemic.”

Apple Inc, Amazon.com and Microsoft Corp were among the heaviest weights on the S&P 500, and more acutely, on the tech-heavy Nasdaq.

Fed Chairman Jerome Powell eased concerns that the central bank’s economic support increased the risk of an inflating asset bubble, and insisted that the central bank’s accommodative monetary policy would remain in place for “some time.”

In prepared remarks ahead of his testimony before the Senate Banking Committee, Powell said the economic recovery was “uneven and far from complete,” later adding that investors are mostly responding to an anticipated rebound as vaccine deployment curbs the pandemic.

“If you look back at (Powell’s) initial tenure, there was some ambiguity as to where the Fed stood,” said Matthew Keator, managing partner in the Keator Group, a wealth management firm in Lenox, Massachusetts. “But over the last year, in response to the pandemic, he’s done an excellent job communicating their commitment to stable markets and full employment.”

The Dow Jones Industrial Average fell 67.55 points, or 0.21%, to 31,454.14, the S&P 500 lost 15.81 points, or 0.41%, to 3,860.69 and the Nasdaq Composite dropped 199.48 points, or 1.47%, to 13,333.57.

Of the 11 major sectors in the S&P 500, five were in negative territory, with consumer discretionary and tech shares suffering the largest percentage losses.

Tesla Inc plunged 3.8% to enter red territory for the year, pulled down amid the tech selloff and falling bitcoin , which were down 13.9%. Tesla recently invested $1.5 billion in the cryptocurrency.

Cryptocurrency miners Riot Blockchain Inc and Marathon Patent Group Inc plunged 24.0% and 22.7%, respectively, while bitcoin bank Silvergate Capital Corp slid 23.3%.

Home improvement retailer Home Depot Inc posted better-than-expected quarterly earnings. But it cast doubt on whether spiking sales, driven by homebound consumers taking on do-it-yourself projects amid COVID lockdowns, are sustainable going forward. Its shares were the heaviest drag on the Dow, falling 3.4%.

Smaller rival Lowe’s Companies Inc, expected to report its results early Wednesday, was down 2.7%

Declining issues outnumbered advancing ones on the NYSE by a 2.30-to-1 ratio; on Nasdaq, a 4.04-to-1 ratio favored decliners.

The S&P 500 posted 46 new 52-week highs and no new lows; the Nasdaq Composite recorded 137 new highs and 53 new lows.

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