Dow climbs 300 points to another record, but sell-off in Big Tech drags Nasdaq down 1.5%

The Dow Jones Industrial Average climbed to a record high on Monday amid strong gains in energy stocks, building on the benchmark’s recent strong rally. Big Tech stocks came under pressure, however, weighing on the Nasdaq Composite.

The blue-chip gauge popped 300 points to a intraday record high, boosted by a jump in Dow Inc and Chevron shares. The S&P 500 traded near the flatline after closing at a record in the previous session. The Nasdaq Composite fell 1.7%.

Gasoline futures experienced volatile trading after a ransomware attack forced the closure of the largest U.S. fuel pipeline over the weekend. Colonial Pipeline, which operates a 5,500-mile system, said it was forced to halt the transport of fuel from the Gulf Coast to the New York metro area on Friday as it “took certain systems offline to contain the threat.” Colonial said Sunday evening that some of its smaller lateral lines once again online, but that its main lines are still shut down.

Shares of energy stocks gained including Marathon Oil, Occidental Petroleum and Devon Energy. Chevron was up 1.7%. Exxon was also higher.

Bigger tech stocks declined, however, weighing on sentiment. Tesla dropped more than 4%. Facebook fell over 4%, while Alphabet dipped more than 2% after a downgrade by Citigroup.

“The tech price action is especially frustrating for many as the thought was Friday would elicit a more sustainable rebound in the space,” Adam Crisafulli, founder of Vital Knowledge, said in a note. “Instead, the group is seeing aggressive selling and accumulating technical damage as prices breach key levels.”

Tech stocks rallied on Friday after a far-weaker-than-expected April jobs report eased concerns about a policy change from the Federal Reserve. Tech stocks have been winning under the low-rates regime during the pandemic.

Last week, the Dow rallied 2.7% and the S&P 500 gained 1.2%. Despite a 0.9% rally on the week’s final session, the Nasdaq Composite shed 1.5% over the same period.

April jobs report showed that U.S. employers added 266,000 net payrolls last month. Economists polled by Dow Jones had expected 1 million additions.

Mike Wilson, chief U.S. equity strategist at Morgan Stanley, noted that traders appear to have already priced a robust economic reopening thanks to declining Covid-19 cases. Any news that could threaten that narrative could quickly impact where portfolio managers allocate cash

“We’re watching expectations vs reality with the market now well priced for reopening. On a cumulative basis, retail sales are above where they would have been on pre-COVID trends – suggesting some expectations risk around the pent up demand narrative,” Wilson wrote over the weekend.

“The labor market has less slack than is typical at this point in the cycle,” he added. “We recommend moving up the quality curve and adding more defensive balance as the market shifts toward mid-cycle leadership.”

The market will face a key test on Wednesday with the release of CPI inflation data. Investors fear a scenario where the Federal Reserve is forced to cut back its easy money policies to curb inflation, before the economy has fully recovered from the pandemic.