Stocks are flat after tech names give up early gains
US stocks moved near the flat line on Wednesday after large tech stocks returned an early rebound.
The Nasdaq Composite and S&P 500 posted modest gains of 0.4% and 0.2%, respectively, while the Dow remained flat.
Major tech stocks rose outdoors but lost ground as the morning wore on. Apple stuck to a 1.5% gain, but Tesla and Amazon hovered between gains and losses. Activision Blizzard also lost some of its post-earnings pop, trading up 3.9%.
Outside of tech, General Motors stock rose 3.4% in early trading after earnings beat expectations. Exercise equipment maker Peloton fell 9% after announcing a safety recall of its treadmill product.
The subdued movements in the stock markets precede a closely watched labor market report on Friday.
Personal payrolls rose 742,000 jobs in April, according to a Wednesday report by ADP. This result was below the expectations of 800,000 jobs of the economists surveyed by Dow Jones. ADP has revised its March report upwards by 48,000 digits.
Investors left tech and growth stocks on Tuesday, pushing the Nasdaq Composite down 1.9%. Coupled with the losses at Apple and Tesla, Netflix’s shares lost 1.2% and Microsoft fell 1.6%. Amazon and Facebook lost 2.2% and 1.3%, respectively. Alphabet fell 1.6%.
The tech stocks battles come after some of the largest companies on the stock market failed to push major indices significantly higher due to strong profit margins.
“With the S&P 500 roughly 1% off record highs, a lot of good news is being priced into the market making stocks potentially prone to disappointment,” UBS strategists said in a note.
There are a number of possible reasons for the downside pressure, including fears of rising inflation, concerns that the Federal Reserve may have to ease monetary stimulus sooner than telegraphed, and the potential for tax hikes in the coming months.
On Wednesday, the IHS Markit US index for service purchasing managers was 64.7 in April, ahead of a forecast of 63.3, according to economists polled by Dow Jones. The ISM index for non-manufacturing industry was, however, slightly below expectations at 62.7. PMIs are calculated so that values over 50 represent expansion in an economic sector.
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