The S&P and Nasdaq Slumped While the Dow Soars
In an interesting turn of events, the Dow has climbed today while the S&P and NASDAQ composite have both fallen.
By midday today, the Dow was up over 0.70%, the S&P was down about .039% and the Nasdaq fell by about 0.76%.
All sectors of the market are up today with the exception of technology and consumer discretionary…
So how do we explain the fall in both the S&P and Nasdaq, yet the rise in the Dow?
Nvidia (NVDA) fell about 5.5% by midday today, and that’s after falling 4% last week to end its eight-week straight winning streak. You see, Nvidia briefly dethroned Microsoft (MSFT) as the most valuable company in the world but quickly after, their pullback began to occur.
Meanwhile, some Wall Street analysts pointed to bearish patterns in Nvidia’s recent trading. But despite all this, the company shares are still up about 150% for the year alone. That’s the second-best performer in the S&P this year, behind SMCI.
So, what we are seeing right now is a rotation in sectors. People are making a flight-to-safety and moving out of tech today.
Larry Tentarelli, a chief technical strategist called the pullback “pretty healthy” and went on to share: “Last week and now, we’re seeing a healthy rotation. This is actually a really nice pause in tech, and a rotation back into some of the other sectors that have been pulling back.”
It’s a well-known fact that all the enthusiasm surrounding artificial intelligence has lifted the market significantly this year and the dangling of the rate cut carrot has also helped to bolster the markets.
Remember, we’re only halfway through the year and the S&P 500 is already up over 15%. It’s been a fantastic year so far in the markets.
But the reason that I wanted to mention Nvidia and take a look at its recent pullback is because it has been a great gauge for the bullishness of the market this year, so if people are pulling their money out of it, I take notice.
But that leaves us with a critical question: Where’s the money moving today since it’s getting pulled out of tech?
Well, the energy sector (XLE) is today’s biggest gainer, up over 2.38% at publishing time, followed by financials (XLF) up 1.33%, and real estate (XLRE) which is up 1.11%.
If we see the flight-to-safety trend continue, then I wouldn’t be surprised if we started taking some more positions in energy, finance, and real estate.
The same sector rotation occurred back in April, so history may be repeating itself.
— Nate Tucci
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