Stock Market Today: Nasdaq's Plunge Overshadows Dow's Flirtation With 35K

The Dow Jones Industrial Average momentarily climbed over the 35,000 mark Monday for the first time in the industrial average's long history. But that accomplishment took second billing to the Nasdaq Composite's nastiest dip in a couple of months.

"Last week there was significant volatility in the growth/tech basket and Friday's disappointing jobs report gave a brief respite to some of this weakness," says Michael Reinking, senior market strategist for the New York Stock Exchange. "However, that has been short lived as these stocks are getting hit very hard again today."

Some were hit for good reason: Facebook (FB, -4.1%) and Alphabet (GOOGL, -2.6%), for instance, were both downgraded by Citi analysts who felt investors' expectations for ad growth at the firms were too optimistic. But the likes of Apple (AAPL, -2.6%), Nvidia (NVDA, -3.7%), Tesla (TSLA, -6.4%) and more were swept up in a selloff in growth names that sent the Nasdaq 2.6% lower to 13,401 – its worst drop since March 18.

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Cyclical and value plays continued to exhibit relative strength, however.

The Dow, which briefly had its head above the 35,000 level, managed to escape with a mere 0.1% loss to 34,742; 3M (MMM, +2.1%) and Procter & Gamble (PG, +1.9%) prevented the industrial average from suffering deeper declines.

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Other action in the stock market today:

• The S&P 500 declined 1.0% to 4,188.
• The small-cap Russell 2000 was dinged up with a 2.6% decline to 2,212.
• Marriott International (MAR, -4.1%) was another notable decliner today after the hotel operator reported earnings. For its first quarter, MAR banked a better-than-anticipated adjusted per-share profit of 10 cents, but revenues of $2.32 billion for the three-month period fell short of expectations.
• Chipotle Mexican Grill (CMG, -2.4%) finished in the red today, too. The burrito chain unveiled several employee compensation incentives as it looks to hire 20,000 domestic workers. Included in the company's initiatives are wage hikes for both hourly and salaried employees, as well as new opportunities to help workers climb the corporate ladder.
• Following a ransomware attack on Colonial Pipeline, which forced that company to temporarily shut down its system that transports fuel along the East Coast, U.S. crude oil futures rose 2 cents to end at $64.92 per barrel.
• Gold futures gained 0.3% to finish at $1,837.60 an ounce, marking their fourth straight win.
• The CBOE Volatility Index (VIX) jumped 16.9% to 19.51.
• Bitcoin prices dipped 3.1% to $55,850.51. (Bitcoin trades 24 hours a day; prices reported here are as of 4 p.m. each trading day.)

Don't Sleep on the Rotation

Experts continue to suggest that investors take the hint.

"The outperformance in mega-cap tech stocks has likely nearly run its course as valuations in these stocks have moved up considerably in recent weeks, thanks to better-than-expected earnings and a retreat in bond yields," says Andrea Bevis, senior vice president, UBS Private Wealth Management. "Investors should diversify beyond mega-cap tech companies and rotate into cyclical and value-oriented areas of the market that should continue to benefit from higher yields and a broadening economic recovery."

That's a continued green light for the "reflation trade" and other recovery-themed stocks that have already done well so far in 2021 ...

... at least, broadly speaking.

A few individual stocks in "preferred" sectors, such as industrials and consumer discretionaries, are throwing off far more warning signs than their peers. With markets feeling just a bit toppy across the board, we've dug around to see where the deepest pockets of risk lie – and we've come across 10 stocks that, at the moment, look a bit rough. Watch your step.