The Dow's Rollercoaster Week Amid Big Tech's Sell-Off

The Dow plummeted mid-week after inflation data

Deputy Editor
May 14, 2021 at 3:55 PM
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The second week of May was an especially volatile one, particularly for the Dow, as Big Tech stocks stole the spotlight for much of the week. On Monday, investors' eyes were focused on the ransomware attack of the Colonial Pipeline that occurred over the weekend. The Dow erased its gains after clearing the significant 35,000 level to snap a three-day win streak, and the tech sell-off handed the Nasdaq a triple-digit loss. By Tuesday afternoon, tech's slide was gripping Wall Street, and took a major toll on other sectors as well. However, a bounce from Big Tech pared earlier losses, though the blue-chip index still finished with its worst day since late February.

By mid-week, inflation data weighed on the benchmarks, after news that inflation grew at its fastest rate since 2008 in April, and the Dow dropped to its lowest level in a month. Thursday, stocks rebounded as investors swarmed beaten-up tech, amid hopeful news from the Centers for Disease Control (CDC) that fully vaccinated people no longer need to wear face masks or socially distance in most indoor settings. Though all three major indexes are eyeing a strong finish to the week at this point on Friday, they're still on track for sizable weekly losses.

Tech In the Spotlight

With plenty of attention directed at tech this week, here are some of the names we looked at. After the weekend's cyber attack, call traders piled onto cybersecurity name FireEye (FEYE). Tesla (TSLA) and Nio (NIO) provided an interesting comparison earlier in the week. And later in the week, Elon Musk continued to intertwine himself within cryptocurrency buzz after mining concerns led Tesla to announce that it will no longer accept Bitcoin as payment. Meanwhile, there's support in place for software stock VMWare (VMW).

More Reports to Sift Through

There were still plenty of earnings to sift through this week. Hotel giant Marriott (MAR) moved lower after a revenue miss. Roblox (RBLX) announced a mixed earnings debut, while Virgin Galactic (SPCE) and Palantir (PLTR) had very different post-earnings responses that same day. On Wednesday, analysts chimed in on Intuit (INTU) and Electronic Arts (EA) after their reports, and options traders flocked to Wendy's (WEN) and FuboTV (FUBO). Meanwhile, analyst bulls targeted Lowe's (LOW) after earnings, while Bumble (BMBL) saw a flurry of bear notes. Lastly, big-name Disney (DIS) reported lackluster fiscal second-quarter earnings.

Earnings Barrage Continues, Economic Data Slows

Looking ahead, the earnings season will start to wind down, with the likes of Applied Materials (AMAT) Carnival (CCL) Cisco Systems (CSCO), Foot Locker (FL), Home Depot (HD), Target (TGT), TJMaxx (TJX), and Walmart (WMT) all set to report. On the economic data front, it will be a relatively quiet week ahead.

In the meantime, traders can check out this past week's Monday Morning Outlook, in which Schaeffer's Senior Vice President of Research Todd Salamone dove into whether or not Wall Street should be bracing for another volatility pop. Plus, Schaeffer's Senior Quantitative Analyst Rocky White took a look at whether or not there was any truth to this old trading theory.


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