Tuesday May 11th

11-05-2021

Nasdaq futures drop 2% as tech sell-off continues, Tesla shares fall

U.S. stock index futures fell on Tuesday as investors continued to dump major technology stocks. Futures for the tech-heavy Nasdaq 100 lost 2%. S&P 500 futures traded 1.3% lower, while those tied to the Dow fell around 300 points. Shares of Big Tech stocks were all in the red once again Tuesday. Apple dropped nearly 3%, while Facebook, Alphabet and Amazon were all down more than 2% in premarket trading. Tesla shares fell nearly 7% in premarket trading as Reuters reported the electric carmaker and bellwether growth play halted plans to expand its Shanghai plant into an export hub. Big Tech got clobbered on Monday as investors exited stocks like Apple and Microsoft, dragging the Dow Jones Industrial Average and the S&P 500 off their record highs in the process. Both of those stocks lost at least 2% to start the week. The Nasdaq Composite suffered the worse of the selling and fell 2.5%, finishing the day at its session low on Monday. Facebook lost more than 4%, while Amazon and Netflix both dropped over 3%. Alphabet dipped more than 2% after a downgrade by Citigroup. Cathie Wood’s Ark Innovation ETF fell 5% to its lowest level since November as Tesla, its top holding, shed more than 6%. The ARK Innovation ETF was down another 4% in premarket trading Tuesday. The market is divided in May with the Nasdaq Composite down 4% and the Dow up 2.5% as investors rotate away from growth shares with relatively high valuations into value stocks that will benefit from the economy reopening from the pandemic and higher inflation. The Technology Select SPDR (XLK) is down 3% so far in May, the worst of any of the market sectors. The XLK was down another 1.3% in premarket trading Tuesday. The broader S&P 500 has managed to remain barely in the green for May amid this market rotation, but it may lose that gain if the tech selling intensifies and value stocks don’t pick up the slack. Simon Property Group saw its stock retreat about 3% in the premarket despite better-than-expected numbers. The real estate property manager reported first-quarter earnings of $1.36 per share on revenues of $1.15 billion. Electronic Arts, Chesapeake Energy, Hanesbrands, and Palantir Technologies will all deliver earnings results on Tuesday. The Labor Department will on Tuesday publish the latest results of its Job Openings and Labor Turnover Survey. Several high-ranking Federal Reserve officials, including Governor Lael Brainard and New York Fed President John Williams, are also scheduled to deliver remarks. Most Asia-Pacific markets came under pressure on Tuesday , following a sell-off in tech stocks that weighed down major U.S. indexes overnight. Stocks in Taiwan led declines across the region, with the benchmark Taiex ending the trading session 3.79% lower. Japanese stocks also recorded losses with Nikkei 225 shedding 3.08% at the close, while the Topix moved 2.37% lower. South Korea’s Kospi ended 1.23% lower. Hong Kong’s Hang Seng Index fell 2% in late afternoon trade as Chinese tech stocks declined. Mainland China markets, however, eked out some gains toward the end of Tuesday’s trading session. The Shanghai composite ended 0.4% higher and the Shenzhen composite inched up around 0.36% at the close. Oil prices fell on Tuesday as the prospect of the main U.S. East Coast gasoline pipeline remaining shut for the rest of this week led some U.S. Gulf Coast refiners to cut output, denting their appetite for crude. U.S. West Texas Intermediate (WTI) crude futures fell 72 cents, or 1.1%, to $64.20 a barrel, after gaining 2 cents on Monday. Brent crude futures dropped 66 cents, or 1%, to $67.67 a barrel, after climbing 4 cents on Monday. Gold prices held steady on Tuesday as investors awaited U.S. consumer price data due later this week to measure whether inflationary pressure is building, with a weaker dollar and a pullback in Treasury yields supporting the metal. Spot gold was unchanged at $1,835.41 per ounce by 0341 GMT, after hitting its highest since Feb. 11 at $1,845.06 on Monday. U.S. gold futures were little changed at $1,836.90 per ounce.