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Stocks Drop On May 5 As Inflation Rises and Growth Slows

By:

Portfolio Manager with Interactive Advisors, CEO of Mott Capital Management

STOCKS – AMZN, ACAD, TWLO, ZM, UBER

MACRO – SPY, QQQ

MICHAEL KRAMER AND THE CLIENT OF MOTT CAPITAL OWN ACAD

Stocks finished mostly lower, with the S&P 500 up just 7 bps, while the Qs fell by almost 35 bps. The index had been higher nearly all day and fell sharply going into the final hour of trading. The market looks tired at this point, and from a technical standpoint, it appears to be breaking down, especially among the growth sector. Specifically, when you start looking at some of these stocks that lead the market higher, appear to now be starting to lead the market lower.

The ISM data likely doesn’t help, with a number that missed estimates and prices paid that keep rising. It should make investors wonder if the growth in the economy is now slowing and headed towards Stagflation. I’m not saying I think we are heading to stagflation, but it is a question that needs to be asked. It is possible that peak US growth is now here or potentially behind us

NASDAQ (QQQ)

The chart below shows how the Qs opened higher but failed to get over the resistance at $332, finishing the day at the lows of the day. You can easily see the RSI is trending lower, and that would indicate to me that lower prices are likely still ahead.

QQQ

Bonds

Despite the hot inflation data from the CPI report, 10-year yields fell. Is the bond market now getting worried about slowing growth? Hard to say at his point, but certainly, a trend that needs to be monitored. I continue to think, for now, that rates are heading higher, with the potential to go beyond 2%. 

Bonds

Amazon (AMZN)

Amazon fell another 1.25% today and is now down almost 11% from its after-hour highs last Thursday. There is still no bounce, and the RSI looks pretty bad, and the next level of support is around $3,200.

AMZN

Uber (UBER)

Uber is getting hit hard following results. I’m not even getting into those results. These guys either lose a huge sum of money every quarter or miss revenue estimates. They can’t seem to hit on all gears. The stock is currently right on support at $48.70 tonight; a break of that level sends the shares lower towards $37.85.

Uber (UBER)

Zoom (ZM)

Zoom fell below $300 for the first time in forever, and that is going to put this one on a path to $275.

ZM

Twilio (TWLO)

Like Uber, Twilio is on the cusp of a huge breakdown. Trading in the after-hours around $320. The next level to watch for comes at $260.

TWLO

Acadia (ACAD)

Acadia, I don’t know what to say. No type A meeting even scheduled, let alone had. They haven’t filed or had the meeting yet due to putting together the briefing documents. Too slow, in my opinion, they should be working day and night to get this process moving. Still have to sit and wait, I guess.

Originally Posted on May 5, 2021 – Stocks Drop On May 5 As Inflation Rises and Growth Slows

Disclosure: Mott Capital Management

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