On Monday, stock indices were strong, buoyed by a rush to buy major technology stocks.
The five largest technology stocks, by market share, all hit new highs on the same day, an event that has never before occurred, according to the Wall Street Journal Market Data Group.
The S&P 500’s technology sector rose 0.8%, and financials were also in demand with that sector increasing 0.5%. However, it was Apple Inc. (NASDAQ:AAPL), Alphabet Inc (NASDAQ:GOOG, NASDAQ:GOOGL), Microsoft Corporation (NASDAQ:MSFT), Amazon.com, Inc. (NASDAQ:AMZN) and Facebook Inc (NASDAQ:FB) that drove the markets higher. The Nasdaq, which is tech-heavy, gained 0.7%, the S&P 500 rose 0.2%, but the Dow Jones Industrial Average lost 0.1%. The small-cap Russell 2000 rose over 3%.
Crude oil (WTI) fell 1% to $48.84 per barrel. The decline was attributed to a statement from the White House that the president may seek to place an additional tax on gasoline.
At the close, the Dow Jones Industrial Average fell 27 points at 20,913, the S&P 500 gained 4, closing at 2,388, the Nasdaq rose 44 points at 6,092, and the Russell 2000 finished at 1,407 for a gain of 7 points. The NYSE’s primary exchange traded 754 million shares with total volume of 3.2 billion shares, and the Nasdaq crossed 1.7 billion shares. On the Big Board, advancers outpaced decliners by 1.3-to-1. On the Nasdaq, advancers led by 1.4-to-1. Blocks on the NYSE declined to 6,284 from 7,549 on Friday.
The CBOE Volatility Index, commonly known as the “Fear Index,” fell yesterday to a low not experienced since February 2007.
Conclusion: Part of the reason for the decline in the VIX could be the closing of all European exchanges to celebrate “May Day,” the traditional celebration of socialist movements. But a very low VIX has nowhere to go but up, and stock markets generally move in the opposite direction to the VIX, and that is not something to celebrate.
The mild move higher of only 0.2% by the S&P 500 yesterday and the fact that an upward move in technology stocks was driven by just five big names is a cause for concern. It is reminiscent of the “Tech Bubble” that culminated in a top in 2001, and the subsequent decline known as the “Tech Wreck.”
It is time to be very careful with our investments as we enter the sometimes not so “Merry Month of May.”
Today’s Trading Landscape
To see a list of the companies reporting earnings today, click here.
For a list of this week’s economic reports due out, click here.
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