S&P 500 Slips on Tech Tumble After Monday's Rally

By Yasin Ebrahim

Investing.com – The S&P 500 fell Tuesday, as investors weighed up weakness in tech, paced by a decline in semiconductor stocks, though a gain in materials stemmed deeper losses in the broader market following a sharp rise a day earlier.

The S&P 500 fell 0.78%, the {169|Dow Jones Industrial Average}} fell 0.46%, or 145 points, and the Nasdaq Composite fell 1.69%. The S&P 500 rallied 2.4% on Monday, its biggest daily gain since June.

Tech pared the bulk of its gains a day earlier as investors appeared to take profit on the sector, with some touting a further correction could still work its way through markets following the late-February wobble.

Apple (NASDAQ:AAPL), Microsoft (NASDAQ:MSFT), Amazon.com (NASDAQ:AMZN), Facebook (NASDAQ:FB), and Alphabet (NASDAQ:GOOGL) was flat. A 2% decline in semiconductor stocks also pressured tech.

"U.S. markets are within a reflationary expansion cycle (secular bull market) on a longer-term basis- but remain extended over the short-run. Continue to watch for a bigger correction ahead (upwards of -10-15%)," Janney Montgomery Scott said in a note.

Zoom Video Communications (NASDAQ:ZM) gave up early day gains to end the day down 9% despite reporting better-than-expected fourth-quarter results and touting upbeat performance for the year ahead.

"Zoom reported another strong showing in 4QFY21 to wrap up a stellar year," Oppenheimer said. "Looking ahead, our attention turns to the operating environment in a postpandemic world, and the pace of G2K penetration, Zoom Phone adoption, and what direction churn (especially with small customers) ultimately takes."

Consumer discretionary was also among the biggest decliners, led by a fall in Target .

Target (NYSE:TGT) fell more than 6% as the retailer's lack of guidance overshadowed fourth-quarter results that beat on both top and bottom lines, underpinned by digital sales that more than doubled.

Energy, meanwhile, fell as oil prices settled lower amid tensions between Saudi and Russia over whether stick or twist on output cuts made last year, with days to go until meeting between major oil producers due Thursday.

In its latest supply and demand outlook presented to the technical meeting, OPEC reportedly forecast crude oil inventories to fall by about 400 million barrels in 2021.

Materials were one of the few sectors in the green, underpinned by gains in Newmont Goldcorp (NYSE:NEM), Mosaic (NYSE:MOS) and Dow Inc (NYSE:DOW).

Dow Inc rose to a record high after Wells Fargo (NYSE:WFC) upgraded its rating on the company to overweight from equal weight, and lifted its price target on the stock to $77 from $60, on expectations for boost to earnings this year from strong demand and the recent winter storm supply.

On the stimulus front, Senate Majority Leader Chuck Schumer reportedly said the Senate will begin assessing President Biden's $1.9 trillion Covid relief bill "as early as tomorrow," insisting that the Democrats will have the votes needed to pass the bill

In other news, Rocket Companies (NYSE:RKT) surged 72%, with some attributing the move higher to Reddit-inspired action as the stock has large number of bearish, or short, bets placed against it.

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