Stock Market Today: What to Do With High-Growth Onslaught?

It was a very mixed session in the stock market day. While some areas of the market did really well, other parts of the market were creamed on Monday. Broadly speaking though — as measured by the S&P 500 — the stock market was flat on the day.

Anyone investing in small caps or high growth wouldn’t agree with that statement, though.

Last week, we finally saw the SPDR S&P 500 ETF (NYSEARCA:SPY), SPDR Dow Jones Industrial Average (NYSEARCA:DIA) and PowerShares QQQ ETF (NASDAQ:QQQ) break out.

The trio had been trapped in a month-long trading range that was both choppy and frustrating for investors. When they finally broke out, investors were relieved despite there still being a few concerns.

Small Caps Lead, High Growth Decimated

One issue was small caps, which were struggling. I would really like to see the iShares Russell 2000 ETF (NYSEARCA:IWM) play catch-up and push over its 50-day moving average at this point. However, Monday’s 1.33% rally against a flat S&P 500 was a good start.

stock market today
Source: Chart courtesy of

On the flip side, the action in high-octane growth stocks was damaging. Many of these names were showing a ton of relative strength throughout 2019, with several doubling, tripling and quadrupling. They showed relative strength in May when the market was under pressure, and again in August when volatility increased.

But when stocks broke out last week, they were stagnant. Now on Monday, they’re getting hammered. It’s one reason why observing relative strength price action is so important.

The Trade Desk (NASDAQ:TTD) and Twilio (NYSE:TWLO) fell more than 10% at one point, while Alteryx (NYSE:AYX) fell more than 15%. Pinterest (NYSE:PINS), Shopify (NASDAQ:SHOP), Roku (NASDAQ:ROKU) and others were also hit with a bevy of selling. Even Starbucks (NASDAQ:SBUX) and Tyson Foods (NYSE:TSN) were struggling.

A number of these stocks made our Top Stock Trades list on Monday as a result of the action.

Hopefully InvestorPlace readers were ready though, as we highlighted this very concern in real-time just last week.

Movers in the Stock Market Today

Shares of AT&T (NYSE:T) were rallying as much as 6% in pre-market trading, but ended higher by just 1.41%. Still, the rally sent shares to multi-year highs after Elliott Management took an activist stake in the company.

They sent a letter to management, highlighting steps they can take to elevate the stock to $60 or more by the end of 2021. That’s up more than 60% from current levels. Keep in mind, shares still yield about 5.6%. Those who have been patient in AT&T stock are now being rewarded.

Shares of Fannie Mae (OTCMKTS:FNMA) rocketed on the day, climbing almost 40% after an appeals court reversed an earlier decision which backed the government taking all of its profits. Freddie Mac (OTCMKTS:FMCC) rallied a similar amount on the ruling.

Facebook (NASDAQ:FB) stock initially moved lower on the day, but closed higher on Monday despite more incoming probes. Now the New York attorney general is investigating the company for antitrust concerns. Joining them will be attorney generals from seven other states as well as the District of Columbia.

Facebook also has to contend with the Federal Trade Commission and U.S. Department of Justice.

However, it could be worse. For instance, look at Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL). It just settled one investigation with the FTC and also has the DOJ breathing down its neck. But like Facebook, it was announced on Monday that a number of state AGs would investigate the company as well.

However, instead of eight states and DC, GOOGL will face 50 attorney generals. California and Alabama will not be involved, but D.C. and Puerto Rico are, bringing the total to 50.

Bret Kenwell is the manager and author of Future Blue Chips and is on Twitter @BretKenwell. As of this writing, Bret Kenwell did not hold a position in any of the aforementioned securities.

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