The stock market and the information technology sector had a case of the moody blues on Monday as a wave of broad-based selling interest carried most stock prices lower.
The move got pinned on all things negative:
- China and EU growth concerns
- Valuation concerns
- Weaker than expected existing home sales in August
- The ominous signaling of a "death cross" for the Russell 2000 (i.e. the 50-day moving average falling below the 200-day moving average)
- Deteriorating market breadth; and
- A loss of buying momentum, evidenced by the drop in Alibaba Group (BABA 89.89, -4.00) and high-beta technology issues
It was simply one of those days where the price action took over and there was little response to good news. In fact, you could count the number of advancing issues in the S&P information technology sector on one hand:
- Apple (AAPL 101.06, +0.10) -- gained 0.2% following reports weekend sales of its new iPhone 6 and iPhone 6+ models topped more than 10 million units
- Qualcomm (QCOM 76.29, +0.76) -- gained 1.0% and stood out as one of the few suppliers to Apple that moved higher on Monday
- Adobe Systems (ADBE 67.20, +0.26) -- gained 0.4% on no news (the company announced after the close that it is going to acquire Aviary, a developer of mobile software development kits for the delivery of creative apps)
- eBay (EBAY 52.47, +0.07) -- added 0.1% with notable hedge fund manager Leon Cooperman saying the company should spin off PayPal; and
- EMC Corp. (EMC 29.68, +0.15) -- tacked on 0.5% amid a swirl of reports the company may be considering strategic alternatives, including a possible sale of the company or a potential spin-off of VMWare (VMW 96.16, +2.02)
Yahoo (YHOO 38.65, -2.28) was a leader in that respect, dropping 5.6% in a post-Alibaba IPO hangover. Banc of America/Merrill Lynch and Bernstein both downgraded YHOO on Monday. First Solar (FSLR 67.17, -3.70) followed close behind with a 5.2% decline of its own, whereas declines on the order of 1% to 3% were seen liberally across the sector.
A similar trading trend played out elsewhere across the technology universe. Chinese Internet stocks were among some of the hardest-hit issues. Weibo (WB 19.81, -1.20), Dangdang (DANG 12.31, -0.65), and Baidu (BIDU 214.86, -10.07) led the group's retreat with declines of 5.7%, 5.0%, and 4.5%, respectively.
Ciena (CIEN 17.78, -1.07) slumped 5.7% on no news and Yelp (YELP 71.68, -4.21) dropped 5.6% on no news.
Winners were few and far between. Declining stocks outpaced advancing stocks by nearly a 5-to-1 margin at the NYSE and almost a 4-to-1 margin at the Nasdaq.
(Disclosure:Briefing.com has a business relationship with Yahoo)
- Information Technology