Stock Market Today: Rate Fears Send Tech Tumbling

The stock market flinched on Tuesday, spooked by comments from Treasury Secretary Janet Yellen, but the damage was uneven. The "rotation trade" out of growth continued to unwind, hurting shares of large technology stocks, while a number of healthcare names and telecoms held up well.

In taped remarks to The Atlantic aired today, Yellen said that "it may be that interest rates will have to rise somewhat to make sure that our economy doesn't overheat" – a statement that runs counter to the Federal Reserve's message that rate hikes are a long way away.

But you might also blame valuations that made the market ripe for profit-taking at the first sign of trouble.

"According to data from Bloomberg Analytics, the S&P 500 is trading at a higher multiple than at any other time in history, including the 1982-2000 secular bull cycle," says Dan Wantrobski, technical strategist and associate director of research at Janney Montgomery Scott. "Historical data shows the trailing-12 month P/E ratio currently trading just under 31, after hitting a recent high of 32.38 in March this year."

The deepest cuts to lofty valuations were found in the Nasdaq Composite (-1.9% to 13,633) and its many tech and tech-esque stocks. The "FAANGs" – Facebook (FB, -1.3%), Apple (AAPL, -3.5%), Amazon.com (AMZN, -2.2%), Netflix (NFLX, -1.2%) and Google parent Alphabet (GOOGL, -1.6%) – were all solidly lower, which also weighed on the S&P 500, down 0.7% to 4,164. 

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The Dow Jones Industrial Average, however, managed to escape with a marginal gain to 34,133, bolstered by Dow (DOW, +2.6%) and Caterpillar (CAT, +2.3%).

Other action in the stock market today:

• CVS Health (CVS, +4.3%) had a solid session after the pharmacy chain reported stronger-than-expected earnings and revenue in its first quarter, with COVID-19 vaccinations and testing boosting its top line. CVS also raised its full-year profit guidance.
• Alcoa (AA) spinoff Arconic (ARNC, +19.2%) was also a post-earnings winner. The company recorded first-quarter profit and revenue above what analysts were projecting, thanks to higher aluminum prices. Arconic also upped its 2021 revenue forecast and authorized a $300 million share repurchase program.
• The small-cap Russell 2000 declined by 1.3% to 2,248.
• U.S. crude oil futures gained 1.9% to end at $65.69 per barrel.
• Gold futures slipped 0.9% to settle at $1,776.00 an ounce.
• The CBOE Volatility Index (VIX) popped 6.4% to 19.48.
• Bitcoin prices sank 5.0% to $54,643.66. (Bitcoin trades 24 hours a day; prices reported here are as of 4 p.m. each trading day.)

YCharts

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Kyle Woodley was long AMZN as of this writing.