Tech sell-off weighs on Wall Street as Powell warns on recovery
The S&P 500 and the Nasdaq retreated on Tuesday as Federal Reserve Chair Jerome Powell warned the U.S. economic recovery remained far from complete, with a selloff in some of the biggest technology companies also weighing on sentiment.
The domestic rebound could still slip into a downward spiral if the coronavirus is not effectively controlled and growth sustained, Powell said.
“Markets are worried about what the Fed knows that we don’t know,” said John Augustine, chief investment officer at Huntington National Bank in Columbus, Ohio.
“The things that are obvious to us are that small businesses are closing and unemployment remains high in the services sector. The Fed aggressively wants to address both of those with more fiscal stimulus.”
Comments from officials that a stimulus deal was still possible had lifted the three main stock indexes on Monday, helping them recoup losses from last week that were sparked by news that President Donald Trump had contracted COVID-19.
Trump said on Tuesday he felt “real good” upon returning to the White House after a three-day hospital stay where he received an experimental treatment for the disease.
Six of the 11 major S&P sectors were up, with the battered energy index tracking a 2% jump in oil prices. [O/R]
A rotation into value-linked sectors such as industrials helped boost the blue-chip Dow, but the Nasdaq slipped further away from record highs following a dip in shares of heavyweight technology mega-caps.
Amazon.com Inc, Apple Inc, Facebook Inc and Google-owner Alphabet Inc fell between 0.8% and 1.6% after news about a U.S. House of Representatives’ antitrust report containing a “thinly veiled call to break up” the companies.
Declines in their share prices led the S&P 500 growth index down 0.4%.
“When you’re in bubble territory with higher volatility, the market is very much driven by sentiment,” said Matt Hanna, portfolio manager at Summit Global Investments. “The sentiment has shifted a little bit, it’s not nearly as bullish as it was just a couple months ago.”