U.S. stocks fall amid rotation out of big tech

U.S. stocks fell for the first time in five days amid a rotation out of megacap tech shares.

The S&P 500 slipped 0.1 per cent, pulling back from the benchmark’s 69th record close reached on Monday. The Nasdaq 100 retreated on turnarounds in four-day rallies for the likes of Nvidia Corp., Apple Inc. and Alphabet Inc. Still, the Dow Jones Industrial Average stayed in the green thanks to reopening beneficiaries such as Walt Disney Co. and Boeing Co. 

Trading was choppy as moves were exaggerated by thin volumes, with shares changing hands in the major benchmarks about a third below daily averages for the past 30 days. Max Gokhman, chief investment officer at AlphaTrAI, attributed today’s reversal to gravity. 

“The bump we saw on Monday didn’t have a clear catalyst, so we’re giving some of that back today,” he said. “I don’t think today’s pullback portends further declines, but this week’s seasonally low volume mixed with unseasonably higher volatility at the individual stock level means that one errant headline could give us a significant move in either direction as we get into the last stretch of 2021.”

Global shares are on course for a third year of double-digit returns, powered by the U.S. surge. Analysts remain bullish on earnings forecasts even amid coronavirus waves and a shift by some key central banks toward tighter monetary policy to fight high inflation.

“My sense is investors got too complacent over the last few days,” said Mike Bailey, director of research at FBB Capital Partners. “Value investors might have noticed the S&P creeping toward a 30 per cent year-to-date move and decided to trim some expensive stocks.”