Dow Snaps 5-Day Win Streak as Tech Wreck Dents Bullish Stampede

By Yasin Ebrahim

Investing.com – The Dow cut gains to snap five-day win streak Monday, as falling tech stocks dragged the broader market lower. 

The Dow Jones Industrial Average fell 0.1%, or 35 points,  but was earlier up more than 300 points hitting an intraday record. The S&P 500 was down 1%, and the Nasdaq Composite slumped 2.6%.

The rotation from tech to economically sensitive cyclicals areas of the market continued as investors shun longer-duration growth stocks amid ongoing inflation pressures and worries about an eventual Federal Reserve.  

Google-parent Alphabet (NASDAQ:GOOGL), and Facebook (NASDAQ:FB), were downgraded to neutral from buy by Citigroup (NYSE:C) on worries that ad-revenue growth is set to wane. 

"[A]d-growth will likely decelerate after 2Q21 (on tougher comps). Historically, that usually isn’t bullish for multiples. As such, we downgrade GOOGL and FB to neutral," Citigroup said.

But others on Wall Street are not so sure that big tech has had its day in the sun.

"With worries around peak tech earnings, it's as 'good as it gets philosophy,' macro inflation/rate jitters, and work from home tailing off as vaccine deployment looks to be hitting the masses, we are seeing multiples compress across the tech sector," Wedbush said.

"However massive growth (and further multiple expansion) is still on the horizon with tech stocks underestimating this surge of demand for the next 2-3 years," it added.

As the quarterly earnings season draws to a close, investors continued to digest quarterly earnings from corporates.

BioNTech SE (NASDAQ:BNTX) reported better-than-expected profit and revenue in the first quarter, and said that there was no evidence to suggest that it would need to update its Covid-19 vaccine for emerging variants of the virus.

Tyson Foods (NYSE:TSN), reported first-quarter results on both the top and bottom lines, but flagged headwinds for its chicken business. Its shares were flat, after paring intraday losses.

Marriott International (NASDAQ:MAR) reported mixed first-quarter results as earnings beat, but revenue fell below expectations. The company did, however, tout optimism ahead, pointing to increased demand as the rollout of vaccines continues.

About 86% of S&P 500 companies that reported earnings through May 7 have beaten analysts’ estimates for earnings per share, and 76% have reported a positive revenue surprise, FactSet said. 

The retreat in stocks from session highs should be viewed as buying opportunity as the bull market still has room to go, Wells Fargo (NYSE:WFC) said. "We view any market disruptions during this seasonally weak period as a potential buying opportunity, as we believe we’re still in the early innings of the new bull cycle."

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