When the top five components of the S&P 500 index, all being technology stocks, Apple Inc. (NASDAQ: AAPL), Microsoft Corp (NASDAQ: MSFT), combined Alphabet Inc. (NASDAQ: GOOG and GOOGL), Amazon.com Inc. (NASDAQ: AMZN) and Facebook Inc, (NASDAQ: FB) are all getting hammered, then the index is going down.
With those five issues comprise 22% of the index, the other 495 have some heavy lifting to combat the move that these issues make as a group.
After Friday’s turbulent session and the two-way action in the index during premarket trading, from up 20 handles to down nearly 30 handles, made the early focus Friday’s closing price (4343.75). When the index made one feeble attempt to clear that hurdle and failed, the selling pressure began to mount. With the leaders charging to the downside, the stage was set for an ugly day.
Once the premarket low (4315) was breached the pace of the decline accelerated. On a positive note, the index did not breach last week’s low (4360), made on Friday only reaching 4367.50. Although the index made several attempts to breach that area, the “buy the dip” held their bids later in the day in the lower 4370 handle and prevailed into the close.
For the session, the index posted its lowest close since July 19 (4241), skidding 52.25 handles to close at 4291.50.
Facebook Inc. (NASDAQ: FB) was the ringleader of the tech wreck. The issue, which has been lower in four of its last five sessions, declined $16.78 or 4.9% to close at $326.23. That was nearly four times the loss of the cash index which was 1.3%.
The lone gainer of the top components was Tesla Inc. (NASDAQ: TSLA) and its gain was not all impressive. The issue did close higher by $6.11 or .8% at $781.53, but that was well off its intraday high of $806.97.
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