U.S. equities overall drifted lower on Tuesday as Wall Street returned from the long Memorial Day holiday weekend. That was enough to snap a seven-day winning streak for large-cap stocks. But it wasn’t enough to sap all the excitement, as Amazon.com, Inc. (NASDAQ:AMZN) briefly crossed the $1,000-a-share level for the first time as the Big Tech bubble — compared to the downward drift in a growing number of other issues — continues to swell.
In the end, the Dow Jones Industrial Average lost 0.2%, the S&P 500 lost 0.1%, the Nasdaq Composite lost 0.1% and the Russell 2000 lost 0.8%. Treasury bonds were stronger pushing down yields and weighing on bank stocks. The dollar weakened, gold lost 0.4% and crude oil fell 0.3%.
It was a relatively quiet session, with breadth negative at 1.6 decliners for every advancer on the NYSE. Volume of 731 million shares was well below the 30-day average. Defensive, yield-sensitive telecom and utility stocks led the way with a gain of 1.4% and 0.3%, respectively. Energy and financials were the laggards, down 1.3% and 0.8%, respectively.
Atwood Oceanics, Inc. (NYSE:ATW) bucked the trend to gain 24.2% on an acquisition deal representing a 33% premium to Friday’s close. TiVo Corp (NASDAQ:TIVO) gained 14% on an analyst note from Jaffray noting upside from a regulatory ruling that competitors had violated two of the company’s patents.
On the downside, Whiting Petroleum Corp (NYSE:WLL) fell 8.7% on a downgrade from Goldman Sachs. HD/4K camera maker Ambarella Inc (NASDAQ:AMBA) fell 7.4% on a downgrade from Pacific Crest on channel checks indicating DJI — the company’s largest customer — could be using a different video processor for its newest offering, the Spark. And BlackBerry Ltd (NASDAQ:BBRY) fell 4.5% on a downgrade at Raymond James.
On the economic front, a busy week kicked off (with Friday’s payroll report looming) with an update on personal spending (up 0.4% in April over March), PCE inflation (up 1.7% annually), and consumer confidence (a slight slip).
A number of Federal Reserve speakers were on the calendar as well, bolstering overall the case for two more quarter-point rate hikes this year as well as the start of the balance sheet tapering process.
Watch for more fireworks later this week as political headlines heat up with former FBI director James Comey set to testify in front of Congress. Watch for a return of the Trump-FBI-Russia headlines that spooked stocks two weeks ago to the deepest one-day loss since last September.
Also keep an eye on market breadth, which continues to narrow in a dangerous sign of diminishing buying interest at a time of overextended sentiment.
Anthony Mirhaydari is founder of the Edge (ETFs) and Edge Pro (Options) investment advisory newsletters. A two-week and four-week free trial offer has been extended to Investorplace readers.
