And that is how it all comes undone.
dropped 4.1% to 10847.6, putting the index down 10% over the past three days and in correction territory. The
fell 2.8% to 3331.84, putting it down 7% in the past three days. The
Dow Jones Industrial Average
declined 632.42 points, or 2.2%, to 27500.89, down 5.5% over the past three days. In other words, it’s ugly out there.
And the market’s hottest stocks were among the victims.
(TSLA) tumbled 21%, but remains up 295% in 2020.
(NVDA), which has doubled in 2020, fell 5.6%.
(PYPL), slipped 3.1%, though remains up 72%.
Zoom Video Communications
(ZM) slid 5% after quintupling in 2020.
(APPL) dropped 6.7%, and is now only up 54% on the year.
“Today’s price action was clearly bearish even as some of the most COVID-sensitive industries showed encouraging strength,” writes Gorilla Trades strategist Ken Berman. “Today’s broad-based selloff wreaked havoc across the leaders of the post-crash rally, but while more short-term pain could be ahead for bulls, airlines and travel- and lodging-related issues performed well, signaling healthy ‘rotation’ towards the hardest-hit industries.”
We’d be feeling a bit more comfortable if the market’s largess extended to a few more names. Just 51 S&P 500 stocks finished higher on the day—the aforementioned groups among them, including
Delta Air Lines
Norwegian Cruise Line Holdings
(NCLH)—which meant that there wasn’t much rotating going on.
Heck, it wasn’t even tech stocks that led the S&P 500 lower on Tuesday. Seven of the index’s 10 biggest losers were energy stocks, including
(OXY). Occidental was upgraded Tuesday morning, but a lot of good that did the stock: It finished down 9.7%. (Oil tumbling 7.6% in one day will do that.) The financial sector was also hit hard.
Oil wasn’t the only economically sensitive commodity sliding on Tuesday. Copper declined 1.1%, a scary sign for anyone worrying about the strength of the economic recovery. And there’s so little economic data due this week—job openings on Wednesday, jobless claims on Thursday—that there’s little to show what’s really happening one way or the other.
In fact, the best news on the day might have been
’ (GM) partnership with
(NKLA), which resulted in both stocks finishing higher on the day, GM by 7.9%, Nikola by 41%. If nothing else, it shows there’s life in electric vehicles on a day that Tesla gets crushed.
For beaten down cyclical stocks to start working, they need to show that not only is the economy recovering but they have a place in the future economy. With one smart transaction, General Motors did just that.
Write to Ben Levisohn at [email protected]