Thanks, FAANG stocks and Jerome Powell.
A March rout in once ultra hot tech names such as Action Alerts Plus holdings Facebook (FB) - Get Meta Platforms Inc. Report and Amazon (AMZN) - Get Amazon.com Inc. Report and fears of rising interest rates have the S&P 500 on the brink of a dreaded correction. The S&P 500 tanked 55 points, or 2%, on Monday to 2,586. That brings the benchmark index down a shade over 10% from its record closing high achieved on Jan. 26.
The Nasdaq Composite hit a 10% correction from its highs midday Monday, primarily on the sentiment shift on FAANG stocks.
Despite the pullback, many on Wall Street continue to be optimistic on the S&P 500 this year.
"We expected a more volatile year for U.S. equities, a key reason we prefer quality, but think the bull market has room to run amid a supportive economic and corporate profits backdrop (S&P 500 year-end target = 3000)," says BofA strategist Savita Subramanian. Spurring some of Subramanian's optimism is that inflows into stocks continue to be healthy and stocks aren't that expensive relative to bonds.
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Why Monday's session is worrisome...