US stocks sink on momentum unwind, mounting growth fears
It was a risk-off day, with stocks slumping while bonds rallied briskly amid data pointing to an unexpected cooling in the US services sector in February and deteriorating consumer confidence.
The S&P 500 tumbled all the way down to its 50-day moving average, closing 1.7% lower.
The Nasdaq 100 declined 2.1% while the Russell 2000 gave back 2.9%.
There was a decidedly defensive tenor to the S&P 500 sector ETF price action: consumer staples were the best-performing sector, up more than 1%, utilities were flat, and all other sectors declined. Tech, consumer discretionary, industrials, and energy were all off more than 2%.
The brisk retreat in the benchmark index over the past two sessions has the hallmarks of a momentum unwind catalyzed by Walmart’s lackluster outlook: the iShares MSCI USA Momentum Factor ETF fell nearly twice as much as the S&P 500 in the final couple trading days of the week. Walmart, for its part, extended yesterday’s losses to close below its 50-day moving average for the first time since August.
Flows related to this month’s options expiry may have played a role in the magnitude of the downdraft.
Nvidia, for instance, had a significant amount of open interest in calls expiring on Friday with a strike price of $140. While the stock opened around that level, the value of those contracts plummeted as shares dipped lower, likely exacerbating the selling pressure on the stock.
A few bright spots on the tape: Celsius spiked after announcing a deal to buy Alani Nu, which is popular among Gen Z. It’s a day ending in y, so Alibaba rallied strongly, this time on reports that GameStop CEO Ryan Cohen upped his stake in the Chinese e-commerce and cloud giant to about $1 billion.
Hims & Hers cratered after the FDA said weight-loss drugs Ozempic and Wegovy are no longer in a shortage, which curbs its ability to sell copycat editions. The news was a boon for Novo Nordisk, however.
Luxury reseller The RealReal also plummeted after issuing full-year forecasts for revenues and adjusted EBITDA that came in light relative to analysts’ expectations.
Probes also weighed on certain companies’ shares to end the week. UnitedHealth sold off on a report that the DOJ is investigating its Medicare billing practices. Meanwhile, CrowdStrike is reportedly under scrutiny by both the DOJ and SEC.
