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S&P 500 Slides as Tech Rally Fizzles

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By Yasin Ebrahim – The S&P 500 closed lower Thursday, as selling in tech stocks resumed following a rebound earlier this week. 

The S&P 500 fell 1.4%, the Dow Jones Industrial Average slipped 0.5%, or 174 points, the Nasdaq lost 2.5%.

Meta, formerly Facebook (NASDAQ:FB), Google-parent Alphabet (NASDAQ:GOOGL), Amazon (NASDAQ:AMZN),  Apple (NASDAQ:AAPL), and Microsoft (NASDAQ:MSFT) were in the red, with the latter down more than 4%.

Still, some on Wall Street see growth ahead for Microsoft as strong cloud spending by businesses will likely benefit the company’s cloud business Azure.

“Our December quarter checks for Microsoft have shown incremental strength again as the Azure cloud growth story is hitting its next gear of growth in Redmond,” Wedbush said.

The stock is set to climb over the next six to nine months “despite multiple/valuation compression and a tightening Fed backdrop […] as the Street is still underestimating the underlying growth story in Redmond (Microsoft),” it added.

Snap (NYSE:SNAP), meanwhile, slumped 10% after Cowen downgraded the stock to market perform, citing ongoing challenges from Apple’s change in privacy rules.

The slowdown in rising Treasury yields rates following data showing inflation pressures for businesses slowed in December didn’t offer any respite for tech.

The PPI rose 0.2% in December, well below the 0.4% rise expected and slower than the 1.0% gain seen in November.

On the labor market front, meanwhile weekly jobless claims unexpectedly rose by 23,000, with economists citing the impact of the Omicron variant.

The Omicron disruptions, however, are expected to be “short-lived, but they will create some volatility in the next couple of weeks,” Jefferies said in a note.

Health care was also a drag on the broader market, paced by a more than 5% slump in Moderna (NASDAQ:MRNA) even as the company said it expected to report data from its Covid-19 vaccine trials in pediatric cohorts aged 2- to 5-year-olds in March.

Elsewhere on the pandemic front, the Supreme Court blocked President Joe Biden’s vaccine-or-test rule, which would require that businesses with at least 100 employees mandate vaccinations or test weekly for Covid.

Industrials ended the day higher, outperforming the broader market, underpinned by a rally in airline stocks following a better-than-expected quarterly results from Delta Air Lines as travel demand continued to improve.

American Airlines (NASDAQ:AAL) jumped 4%, United Airlines were up 3%, while Delta Air Lines (NYSE:DAL) was up more than 1%.

Consumer staples and utilities defensive concerns of the market were also in ascendency as investors sought safety. 

S&P 500 Slides as Tech Rally Fizzles

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