By Yasin Ebrahim | Stock Markets
he S&P 500 snapped a three-day win streak Tuesday as technology and energy stocks slipped with investors weighing optimism on the global recovery against the recent rally that some say has pushed stocks into “overbought” territory.
“Watch the S&P 500 over the next few days for potential consolidation – that benchmark is now very overbought / extended on the short-term trading charts and is likely to see some profit taking ahead in our opinion,” Janney Montgomery Scott said in a note. Initial support is touted in the 3,975-to-4,000 zone, the firm added.
The gloomy update comes just as energy stocks, which had been battered a day earlier, gave up intraday gains despite oil prices catching a bid on optimism over the global recovery and ongoing signs of reopening progress in the U.S.
The International Monetary Fund lifted its global growth forecast to 6% in 2021, up from its prior forecast of 5.5%, citing the ongoing progress of the vaccine deployment worldwide. The IMF forecast the euro zone to grow 4.4% in 2021. The faster roll out of vaccines in the U.S. continues to spur the reopening process, with California Governor Gavin Newsom saying the state will lift most restrictions by June 15.
Financials also played a role in the broader market malaise as the run up in regional banks paused as U.S. bond yields fell. The U.S. 10-year slipped below 1.7% quote yields after trading in range of 1.67% to 1.72% in recent days.
State Street (NYSE:STT), Bank of New York Mellon (NYSE:BK), PNC Financial Services Group Inc (NYSE:PNC) were lower, with just a week to go until the major Wall Street banks kick off the first quarter earnings season in earnest.
“Although we expect near-term volatility as 1Q earnings start on April 14, reflecting weak loan growth, margin pressure, lower mortgage banking revenues and seasonal factors, we remain positive on the bank group,” Wedbush said.
Technology struggled to hold onto gains, with the Fab 5 mostly in the red even as falling U.S. bond yields supported investor sentiment on longer-duration growth stocks.
In other news, Tesla (NASDAQ:TSLA) struggled to get going after racking up a 6% gain on Monday, as investors digested a bearish note from Roth Capital.
Roth Capital said Tesla is only worth $150 a share and suggested the electric automaker was a “minor player” in the U.S. and European markets.