Wall Street Close: DJI30 drops from fresh record high, Nasdaq down 2.55%

  • US equities fail to extend Friday’s upbeat performance to Monday.
  • Need for more clues to defy reflation fears joined downbeat technology shares to back the bears.
  • Citi downgrades Facebook, Alphabet amid doubts over online advertising growth, challenging valuation multiples.
  • US FDA approves Pfizer-BioNTech vaccine for under 12-15 age group.

Wall Street benchmarks dropped, after an initially good start to the week, as optimism over the Fed’s easy money policies fizzled on Monday. While fears that slowing inflation may weigh on the technology shares that roared of late was the main catalyst, Citibank’s downgrade to Facebook and Alphabet also played their role to recall bears. Furthermore, cautious sentiment ahead of Wednesday’s key US inflation figures, to confirm no more tapering and rate-hike fears, also weigh on the market sentiment.

Against this backdrop, Dow Jones Industrial Average (DJI30) declines 0.10% or 34.94 points after refreshing the record top with 35,091.56 earlier in the day. S&P 500 is the second in the losing line with 1.04%, or 44.17 points, the downside to 4,188.43. However, the winner, actually the biggest loser, is Nasdaq that slumps 2.55% or 350.38 points to 13,401.86.

Amid a lack of major data/events, US markets carried Friday’s upbeat performance to start Monday’s trading. However, doubts over whether a one-time drop in the US Nonfarm Payrolls (NFP) is enough to save the Fed from dailing back easy-money policies resurfaced afterward and weighed on the stocks. Also, chatters that weaker inflation will be a challenge for the technology shares add to the market pessimism then after.

The sentiment helped Dallas Fed President Robert Kaplan to reiterate his push for tapering as the US government braces for further stimulus.

It’s worth mentioning that Citibank becomes the first among Bloomberg’s 43 analysts to downgrade Alphabet from Buy to Hold. The US investment banker also does the same for Facebook citing challenges to their main source of income, namely advertising.

Elsewhere, the coronavirus (COVID-19) woes remain present in Asia but vaccine updates from the European Union (EU), Australia and the US, mainly concerning Pfizer-BioNTech shots, were upbeat.

Looking forward, Wednesday’s US Consumer Price Index (CPI) for April becomes the key reading but chatters from the Fed policymakers may direct markets before that.

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