// October 4th, 2021 // Daily News

Monday October 4, 2021

Dow sheds 350 points as investors ditch technology stocks, Nasdaq drops 2%

The major averages took steep losses to start the week as investors continued their rotation out of technology stocks amid rising bond yields.

The Dow Jones Industrial Average fell about 350 points, despite a large gain in Merck. The S&P 500 shed 1.3%. The technology-focused Nasdaq Composite was the relative underperformer, dipping roughly 2.2%.

Large tech shares like Apple, Nvidia, Amazon and Microsoft were lower as investors eyed bond yields. A surge in rates to end September knocked highly valued tech stocks. The 10-year Treasury yield was slightly higher Monday, trading around 1.47%. The 10-year U.S. Treasury yield hit 1.56% last week, its highest point since June, with investors concerned about inflationary pressures and tighter monetary policy.

Social media giant Facebook lost 4.9% after being accused of a “betrayal of democracy” by a whistleblower who revealed her identity on Sunday.

“The financial markets are adjusting leadership to reflect another Covid-induced reopening cycle,” said Jim Paulsen, Leuthold Group chief investment strategist. “That is, commodities are rising, bond yields are rising, cyclical sectors and small cap stocks are outpacing, and technology and growth stocks in general are underperforming.”

On the positive side, Tesla rose nearly 2% after the company said this weekend that it delivered 241,300 electric vehicles during the third quarter, well above analysts estimates.

Merck shares were up another 2%, following through on an 8% surge on Friday after the drug maker said its oral antiviral treatment developed with Ridgeback Biotherapeutics for Covid-19 reduced the risk of hospitalization or death by 50% for patients with mild or moderate cases.

Some airlines stayed in the green after Barclays upgraded the North American Airlines sector to positive from neutral. Southwest rose 2% after an upgrade to overweight from equal weight from the same analyst.

Energy stocks also rose amid an uptick in oil prices. Exxon Mobil gained 1.4% and ConocoPhillips rallied 2.7%. Chevron advanced 1.3%.

“At these extremely lofty valuations stock prices are very sensitive to modest changes in incremental capital flows and it appears that there is some ‘performance chasing’ going on as the energy space is attracting capital which is trying to make it look like they had exposure to oil & gas (window dressing) and that means less money flowing into tech,” said Mark Yusko, Morgan Creek Capital Management CEO and chief investment officer.