The market was mixed Thursday, with some sectors up and some down. The 5 biggest losers on the Dow Jones Industrial Average were largely consumer, banking and tech companies.
Manufacturing stocks were flat-to-up for most of the day. Jobless claims for the past week came in at 860,000, beating estimates of 870,000, with the actual result only falling marginally from last week’s result of 890,000. A potentially slowing rate of economic recovery is concerning many investors.
Here were the 5 biggest losers on the Dow by Thursday 2:30 PM EDT:
Goldman Sachs: -2.6%
Apple : -2.3%
Tech was leading the market down Thursday and it wasn’t your grandfather’s tech company like IBM IBM which was flat-to-up and is somewhat tied to the business cycle. It was growth tech stocks that were falling, as investors continue their apparent re-rating of their valuations. Tech stocks have been famous in business circles this year for outperforming value stocks by a wider margin (for most of the year) than was seen before the 2000 tech bubble burst. At-home services that are secular growth trends -- streaming, e-commerce, cloud and new data storage -- saw accelerated customer adoption because of the pandemic. Analysts began to attach stronger growth rates in out-years in their valuations, further raising valuation multiples. But many analysts, even some that have participated in the upward revisions and that have spoken with TheStreet say they are starting to cut their estimates for some of those out years. Demand for these services may have been massively pulled forward and investors are essentially re-pricing these stocks.
Nike and Disney were under pressure. Disney especially is tied to the consumer both through its theme parks business and its reliance on sports advertising for its television offerings. Consumer discretionary more broadly has begun to trade at incredibly expensive valuations even compared to the ultra-low interest rates. The broader market is more-or-less priced for these rates and just earlier this week, consumer discretionary was trading at a forward one-year earnings multiple that was 1.8 times the average multiple on the broader market. Historically the sector trades closer to directly in-line with the broader market. The S&P 500 Equal Weight Consumer Discretionary Index was down more than 1% by 2:30.
Goldman Sachs fell along with other bank stocks, as the yield curve compressed some on Thursday.