S&P 500 Retreats As Tech Stocks Decline

Key Insights

• Tech stocks pulled back as Treasury yields continued to rebound. 
• Meta declined towards the $93 level as traders reacted to the major Instagram outage. 
• Energy stocks managed to gain some ground today despite a broad pullback in oil markets and Biden’s plans to impose a windfall tax on energy companies. 

Meta Tests New Lows

S&P 500 settled near the 3870 level amid a broad pressure in the tech segment. The tech-heavy Nasdaq Composite retreated towards the 11000 level. The sell-off was led by Meta, which lost 6% in today’s trading session.

The major Instagram outage served as the main negative catalyst for Meta shares today. However, it looks that investors remain disappointed by the recent earnings report. Earnings estimates are moving lower at a robust pace, which is bearish for Meta stock. Other leading tech stocks like Apple, Microsoft, Alphabet, and Amazon were down by 1-2% today.

The yield of 10-year Treasuries has moved towards the 4.10% level today as traders remained nervous ahead of the Fed Interest Rate Decision, which will be released on Wednesday. Higher Treasury yields and stronger dollar put additional pressure on stocks.

Interestingly, energy stocks managed to gain some ground today despite the pullback in oil markets and Biden’s plans to introduce a windfall tax on energy producers.

NXP Semiconductors was down 2% in the post-market session after releasing its quarterly report. The company reported revenue of $3.45 billion and GAAP earnings of $2.79 per share, beating analyst estimates on both earnings and revenue. NXP Semiconductors noted that its results were impacted by the weakening macro environment in its IoT business.

The company added that it remained cautious in the intermediate term due to the “uncertainties in the macro environment.” Traders also prefered to remain cautious, and the stock found itself under pressure in the post-market session.

It should be noted that semiconductor stocks have been mostly moving lower in recent months due to rising tensions between U.S. and China, which may hurt the semiconductor industry worldwide. It remains to be seen whether the situation improves in the upcoming months.

S&P 500 Settled Back Below The Support At 3885

S&P 500 faced resistance at 3915 and moved below the support at the 3885 level. In case S&P 500 settles below this level, it will head towards the next support level, which is located near the 50 EMA at 3835.

A move below the 50 EMA will open the way to the test of the support at 3805. In case S&P 500 declines below 3805, it will head towards the support at 3760.

On the upside, S&P 500 needs to settle back above the 3885 level to have a chance to gain upside momentum in the near term. If S&P 500 climbs back above 3885, it will head towards the resistance at 3915. A move above this level will push S&P 500 towards the next resistance level at 3960.

For a look at all of today’s economic events, check out our economic calendar.