The major averages fell on Tuesday, following a strong start to May, with technology stocks experiencing the biggest selling pressure.
The Dow Jones Industrial Average lost 250 points. The S&P 500 fell about 1%. The tech-heavy Nasdaq Composite was the hardest hit, dropping more than 2%.
The so-called FAANG names (Facebook, Amazon, Apple, Netflix and Google-parent Alphabet) were all trading lower shortly after the open. Apple’s stock shed more than 2%.
Meanwhile, investors also ditched reopening plays with airlines, cruise lines and retailers giving back some of Monday’s gains.
Pfizer shares were flat despite posting quarterly results that beat expectations and raising its 2021 guidance. CVS Health shares jumped 2.5% after the pharmacy chain and insurance company also raised its guidance.
United States Steel moved 4% higher after Credit Suisse upgraded the stock to outperform from underperform, saying that the surge in prices for steel made it clear that the industry was in a “super cycle.”
With the market at all-time highs, investors are torn between playing the reopening with shares like retailers or continuing to bet on Big Tech, which just reported blockbuster earnings.
“The whole thing to me is this amazing leadership problem,” Frank Gretz, a technical analyst at Wellington Shields, told CNBC. “There were 2,800 stocks up on the New York Stock Exchange yesterday, but it was hard to make money. That’s a very unusual pattern. It’s just the difference between these reopen stocks versus the tech stocks.”
The move in equities followed solid gains for the Dow on Monday as investors piled into shares that would benefit the most from an economic reopening. The 30-stock benchmark rallied more than 200 points, while the S&P 500 inched up 0.3%. Retail stocks led the market advance with Gap and Macy’s rallying more than 7%. Dillard’s rose nearly 10%, while Urban Outfitters and Kohl’s both gained more than 5%.
States continued to relax pandemic restrictions amid the vaccine rollout. New York Gov. Andrew Cuomo announced that most capacity restrictions will be lifted across New York, New Jersey and Connecticut, while 24-hour subway service will resume in New York City later this month.
Florida Gov. Ron DeSantis signed an executive order on Monday that immediately suspends the state’s remaining health restrictions.
The Dow and the S&P 500 just posted their third consecutive months of gains, bringing their 2021 gains to more than 11% each.
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— with reporting from CNBC’s Jesse Pound.
