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Market Snapshot: Dow ends lower for first time in 6 sessions after topping 35,000 milestone, and social-media stocks weigh on Nasdaq

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The Dow Jones Industrial Average snapped a 5-session win steak Monday, falling late in the session after pushing above the 35,000 milestone, with the broader market came under pressure as high-profile Big Tech shares tumbled.

What did major indexes do?
  • The Dow
    DJIA,
    -0.10%

    fell 34.94 points, or 0.1%, to close at 34,742.82, after reaching an intraday peak at 35,091.56.
  • The S&P 500
    SPX,
    -1.04%

    shed 44.17 points, or 1%, ending at 4,188.43.
  • The Nasdaq Composite
    COMP,
    -2.55%

    tumbled 350.38 points, or 2.6%, to finish at 13,401.86.

On Friday, stocks shook off a much-weaker-than-expected April jobs report Friday, with the Dow and S&P 500 both ending at records, while the Nasdaq Composite outpaced its major benchmark peers but still posted a weekly loss.

What drove the market?

Stocks tumbled late Monday, leaving the S&P 500 and Nasdaq Composite with their worst daily losses since March 18, as investors weigh how much of the economic recovery already has been priced into stocks.

“Our point of view is that there are a lot of stocks that are extremely stretched in terms of valuations,” said Sandi Bragar, managing director at Aspiriant, a wealth management firm.

Bragar’s not worried about the pace of the economic recovery or a pullback of central bank’s monetary support this year, but she is worried that with “yields on bonds so low and stocks so high,” that financial markets could be poised for a lot more volatility, “which we haven’t seen that much of this year.”

Friday’s disappointing April jobs report, which saw U.S. nonfarm payrolls rise by 266,000 versus a consensus forecast for an increase of 1 million, had initially been characterized as providing a positive backdrop for equities.

Read: Here’s why the Dow and S&P 500 hit records despite a weak April jobs report

“In our view, the jobs report shows a surprising pause in the labor market recovery, coming at a time when the underlying fundamentals and alternative data are pointed towards acceleration,” wrote analysts at Credit Suisse, in a note.

“Nevertheless, this report should delay any discussion of withdrawing accommodation until a decisive labor market rebound takes place,” they said. “As such, we continue to expect positive equity returns, but at the expense of increased near-term volatility.”

See: Weak jobs report belies U.S. recovery under way — but are international stock markets a better bet now?

Investors were tracking developments around a cyberattack on a vital pipeline that delivers around 45% of fuel consumed on the East Coast. Alpharetta, Ga.-based Colonial Pipeline over the weekend said it closed the conduit after it was the target of a cyberattack. On Monday, Colonial said it was aiming to “substantially” restore operations by the end of the week.

Commodities Corner: Here’s what the shutdown of the Colonial Pipeline means for gas prices and energy markets

Gasoline futures
RB00,
+0.09%

were up fractionally in recent action. Analysts said pump prices may avert a rise if operations are restored within a few days. Oil futures also close fractionally higher, amid lingering concerns that the incident could chill near-term demand for crude.

Tech and other growth-oriented stocks, which are expected to grow earnings faster than their peers, were buoyed Friday as the jobs data sparked a retreat for Treasury yields. But those shares significantly underperformed on Monday, with some of the largest tech companies suffering significant losses.

Shares of Facebook Inc.
FB,
-4.11%

tumbled 4.1%, while Google parent Alphabet Inc.
GOOG,
-2.38%

GOOGL,
-2.56%

shares dropped 2.4% after Citibank analyst Jason Bazinet cut his ratings for both to neutral from buy, citing worries investors were overly bullish on online advertising prospects. 

Among other tech heavyweights, Apple Inc.
AAPL,
-2.58%

shares slumped 2.6%; Netflix Inc.
NFLX,
-3.40%

fell 3.4%; and Tesla Inc.
TSLA,
-6.44%

dropped 6.4%.

Need to Know: This is the ‘greatest threat’ to Big Tech’s S&P 500 dominance, Goldman says

The yield on the 10-year Treasury note
TMUBMUSD10Y,
1.603%

was up 2.5 basis point at 1.601% Monday. Yields and bond prices move in opposite directions.

Meanwhile, a strong earnings season was moving into its final stage.

Through Friday, 88% of S&P 500 companies had reported earnings covering the first quarter, according to FactSet. The index is now reporting the highest year-over-year growth in earnings since for the first quarter since 2010, said John Butters, senior earnings analyst at FactSet, in a note.

Analysts also expect double-digit earnings growth for the remaining three quarters of 2021. These above-average growth rates are due to a combination of higher earnings for 2021 and an easier comparison to unusually weak earnings in 2020 due to the negative impact of COVID-19 on numerous industries, Butters said.

Which companies were in focus?
What did other markets do?
  • The ICE U.S. Dollar Index
    DXY,
    +0.07%
    ,
    a measure of the currency against a basket of six major rivals, was virtually unchanged.
  • Oil futures closed at a modest gain, with the U.S. benchmark settling at $64.92 a barrel. Gold futures
    GC00,
    +0.29%

    closed slightly higher, up 0.3% to settle at $1,837.60 an ounce.
  • The pan-European Stoxx Europe 600
    SXXP,
    +0.10%

    closed up 0.1%, while London’s FTSE 100
    UKX,
    -0.08%

    gave up 0.1%. In Asia, Hong Kong’s Hang Seng Index
    HSI,
    -0.05%

    fell 0.1%, while Japan’s Nikkei 225
    NIK,
    +0.55%

    rose 0.5% and the Shanghai Composite
    SHCOMP,
    +0.27%

    gained 0.3%.
  • Crypto assets were in focus, with parody coin dogecoin
    DOGEUSD,
    +2.51%

    dropping sharply following the airing of a heavily hyped episode of “Saturday Night Live” guest-hosted by Tesla CEO Elon Musk. Ether
    ETHUSD,
    +2.05%

    coins that run on the Ethereum blockchain, however, were 10.8% higher, after trading near records above $4,000.

Check out: What the dogecoin army is saying as the cryptocurrency’s tumble triggers a bearish break in the long-term trend line

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