Tech Stocks Tumble After ‘Sudden’ Trading Slump—Here’s Why Experts Are Worried The Weakness Could Continue

Trading On The Floor Of NYSE While Stocks, Commodities Tumble As China Strikes Back

After a Monday rally that pushed stocks near record highs, the market is falling Tuesday as investors sell off the buzzy technology stocks that led a massive pandemic rally, and analysts are concerned the market could be topping out as the broader economy picks back up, forcing the government to ease up on its unprecedented relief measures.

Key Facts

Shortly after the market open, the Dow Jones Industrial Average fell 70 points, or 0.2%, to 34,042 points, and the S&P 500 shed 0.5%, while tech-heavy Nasdaq, which has largely underperformed this year despite reaching a new peak last month, tumbled 1.1%.

A slew of mega-cap tech firms are pushing the market down Tuesday, with Tesla, Apple and Facebook down close to 1.5% apiece after a “sudden” slump in pre-market trading around 7:30 a.m. EDT, Vital Knowledge Media Founder Adam Crisafulli said in a morning note.

Pointing to lackluster responses to big-teach earnings that smashed expectations (including Apple falling 0.1% after a blowout report Wednesday), Crisafulli said the “main problem” in the market is ongoing weakness in tech, as investors continue to sell off shares after “chasing” the sector’s massive rally last year.

Though it beat expectations with its late-Monday earnings report, shares of fertilizer-maker Mosaic are heading up losses in the S&P, sinking more than 7%, after the company posted net income of $157 million on revenue of $2.3 billion—and a slew of accounting losses that pushed earnings down by $77 million.

Even apparel-maker Under Armour, which hiked its full-year outlook Tuesday morning thanks to resurgent consumer demand, is falling 4% after a better-than-expected earnings report, as analysts laser in on a $9 million settlement with the SEcurities and Exchange Commision over misleading accounting practices.

Crucial Quote

“Investors didn’t pay much attention to the sell-in-May adage yesterday, but with stocks hovering around all-time highs, the market is starting to look as if it might be topping,” Oanda Analyst Sophie Griffiths said in a morning note, adding that “lackluster trading” should be expected after the recently rally. “Given the particularly strong run-up from November to April, investors could begin to see this as a good time to reduce exposure.”

What To Watch For

The monthly jobs report comes out Friday, and economists are expecting that the labor market added a staggering 1 million jobs last month. Crisafulli says that the Federal Reserve is “very likely” to change its messaging if the Friday report is “anywhere close” to consensus estimates, and if recent market reactions are any indication, investors will likely be spooked if the Fed starts to indicate it may ease up on its unprecedented economic support.

Surprising Fact

Shares of crypto exchange Coinbase, which has been trading publicly for less than one month, are down 2% Tuesday, pushing the stock down 15% from a high less than two weeks ago. The company’s market capitalization—of roughly $55 billion—is now just about half of what it was at its peak.

Tangent

In the face of booming consumer demand lifting imports, the international trade widened to a record high of $74.4 billion in March, up $3.9 billion from February, according to data released Tuesday by the U.S. Census Bureau. March exports jumped 6.6% month over month to $200 billion. Reflecting the pandemic recovery, the goods and services deficit increased $83.2 billion, or 64%, year to date, compared to the same period in 2020.

Further Reading

Dow Jumps 300 Points As Stocks Kick Off Worst Six Months Of The Year (Forbes)

Here’s Why Experts Think The Stock Market Could Rip Higher As Stocks Test New Highs (Forbes)

I’m a reporter at Forbes focusing on markets and finance. I graduated from the University of North Carolina at Chapel Hill, where I double-majored in business journalism and economics while working for UNC’s Kenan-Flagler Business School as a marketing and communications assistant. Before Forbes, I spent a summer reporting on the L.A. private sector for Los Angeles Business Journal and wrote about publicly traded North Carolina companies for NC Business News Wire. Reach out at jponciano@forbes.com.

Source: Tech Stocks Tumble After ‘Sudden’ Trading Slump—Here’s Why Experts Are Worried The Weakness Could Continue

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Stock Market Sell-Off: Dow Falls Over 600 Points As Tech Shares Plunge Again

The market moved sharply lower on Tuesday—and the Nasdaq hit correction territory—as the widespread sell-off in tech stocks continued, following the sector’s worst drop since March last week.

The Dow Jones Industrial Average was down 2.3%, over 600 points, on Tuesday, while the S&P 500 fell 2.8% and the tech-heavy Nasdaq Composite lost 4.1%.

The Nasdaq officially entered correction territory, falling 10% in just the last three days of trading.

The tech sell-off continued on Tuesday, dragging the market lower as investors once again rotated out of hot Nasdaq stocks: Shares of Facebook, Amazon, Netflix and Google-parent Alphabet fell more than 3%, while Apple dropped over 6%.

Semiconductor and chip stocks—including Nvidia, Micron and Advanced Micro Devices—plunged after the U.S. Department of Defense over the weekend floated the idea of blacklisting China’s largest chipmaker, SMIC.

Shares of Tesla tanked 21%—the stock’s largest one-day drop in history—after the S&P Dow Jones Indices decided not to add it to the S&P 500 index last Friday, instead choosing Etsy, Teradyne and Catalent.

Electric truck maker and Tesla rival Nikola, meanwhile, surged by up to 53% on Tuesday after General Motors announced an 11% stake—worth $2 billion—in the company.

SoftBank’s stock also fell 7% after it was identified that the investment juggernaut had bought billions of dollars in call options in Big Tech names including Tesla, Amazon, Microsoft and Netflix, potentially driving up valuations.

Crucial quote

With tech stocks leading the market higher in recent months, the ongoing sell-off is just a correction, says Mark Haefele, chief investment officer at UBS Global Wealth Management, in a recent note. “The sector is expensive, but not in a bubble,” he said, adding that a correction “need not signal the end of the rally.” While the U.S. tech sector has climbed to surging valuations, they are still “well below levels seen at the height of the dotcom bubble of the late 1990s levels, when the index forward P/E rose above 70x.”

Key background

Tuesday’s losses follow a big reversal in major tech stocks last week. On Friday, stocks snapped a five-week winning streak, with the tech sector suffering its worst week since March 20. The Dow plunged by up to 600 points before paring back losses late in the afternoon. That followed a sharp sell-off on Wall Street on Thursday: The market posted its worst day since June as stocks retreated from record highs and tech shares plunged.

The Dow slid 2.8%—more than 800 points, while the S&P fell 3.5% and the Nasdaq dropped 5%. Shares of Big Tech companies, which have been instrumental in leading the market’s rebound over the past few months, dragged the market lower on Thursday and Friday. Before last week’s sell-off, stocks had made a strong start to September, despite it being a historically bad month for markets.

Further reading

Stock Market Sell-Off: Dow Falls 150 Points Despite Late Rally (Forbes)

Stock Market Sell-Off: Dow Plunges 800 Points, S&P 500 Falls 3.5% (Forbes)

JPMorgan Investigating Employees For Misuse Of Coronavirus Stimulus Funds (Forbes)

Virgin Galactic Stock Could Surge By More Than 50% This Year, Says UBS (Forbes) Follow me on Twitter or LinkedIn

Sergei Klebnikov

Sergei Klebnikov

I am a New York—based reporter for Forbes covering breaking news, with a focus on financial topics. Previously, I wrote about investing for Money Magazine and was an intern at Forbes in 2015 and 2016. I graduated from the University of St Andrews in 2018, majoring in International Relations and Modern History. Follow me on Twitter @skleb1234 or email me at sklebnikov@forbes.com

NCino Cloud Based Financial Services Firm Aims To Raise $100 Million In IPO

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Two months after the Covid-19 pandemic froze the IPO market, financial services software company NCino has filed for a public offering.

The Wilmington, North Carolina-based startup is seeking to raise $100 million in an IPO, it announced Monday. A regulatory filing with the U.S. Securities & Exchange Commission did not disclose how many shares the company planned to sell, or at what price. The company declined to comment beyond a press release, citing SEC regulations.

The announcement comes as other tech companies are weighing up their potential futures on the public market since Covid-19 battered the economy. Some have seen great success: Shares in ZoomInfo, a cloud-based sales and marketing software firm, surged 62% on its first day of trading, making it the largest tech company debut of 2020. But other tech firms battered by the pandemic, such as Airbnb, are yet to announce whether they will proceed with planned IPOs.

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Launched in 2012 by executives of North Carolina-based Live Oak Bank as a spin-off venture, nCino provides Salesforce-based software to improve loan and deposit processing, among other financial services. The company, which employs more than 900 people, has raised a total $213 million from investors including  Insight Partners, Salesforce Ventures and T. Rowe Price. Insight holds a 46.6% stake in the company, company filings show.

Led by CEO Pierre Naudé, nCino now has more than 1,100 corporate customers, mostly banks, including Bank of America and Santander, the company said in its SEC filing. In recent months, the company’s software has been used by these customers to process more than $50 billion in Paycheck Protection Program funding using its software, and handled hundreds of thousands of requests from small businesses seeking loans.

According to nCino’s SEC filing, known as an S-1, the company generated $138 million in the fiscal 2020 year, with $27.8 million in losses, up from $91.5 million revenue on $22.3 million in losses in 2019.

The company will list on the NASDAQ market under the ticker “NCNO.” The deal will be underwritten by Barclays, SunTrust Robinson Humphrey Bank of America Securities and KeyBanc Capital Markets.

Follow me on Twitter or LinkedIn. Send me a secure tip.

I’m a staff reporter at Forbes covering tech companies. I previously reported for The Real Deal, where I covered WeWork, real estate tech startups and commercial real estate. As a freelancer, I’ve also written for The New York Times, Associated Press and other outlets. I’m a graduate of Columbia Journalism School, where I was a Toni Stabile Investigative Fellow. Before arriving in the U.S., I was a police reporter in Australia. Follow me on Twitter at @davidjeans2 and email me at djeans@forbes.com

Source: https://www.forbes.com

Learn more about how nCino’s Bank Operating System enables financial institutions of all sizes to succeed in today’s competitive environment.
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