Yesterday’s rally in technology stocks and the NASDAQ Composite has disappeared this morning. At 12:30 New York time the NASDAQ was off 1.6%; the Technology Sector Select SPDR (XLK) was down 1.72%; and individual technology stocks were also in the red. Amazon (AMZN), for example, was lower by 1.58%; Nvidia (NVDA) was down 3.57%; Apple (AAPL) had retreated 1.58%; and Facebook had lost 1.16%.
The troubles in the tech sector were more than enough to outweigh good news for the financials. The Federal Reserve gave 34 big U.S. banks a green light on increasing dividend payouts after these banks passed the latest stress test from the Fed. The Financial Sector Select SPDR (XLF) was up 0.29% this morning.And good news from the Commerce Department on the latest revision of first quarter GDP growth. This release took GDP growth in the first quarter up to a year over year 1.4% from the 1.2% of the last revision. Remember that the first read on Q1 GDP growth came in at just 0.7%.
The return of the downward trend in the technology sector today certainly indicates that sellers haven’t gone away and it suggests that yesterday’s rally might have come as a result of short sellers buying shares to cover their positions–and take profits–with the idea of putting those shorts back on today.
The CBEO S&P 500 Volatility Index (VIX) was up 19.7% to 12.01 as of 12:30 p.m. New York time.