Rotation into "reopening" stocks helped cover up some of the damage, but it was a very ugly day for much of the market. The Dow Jones industrial average was positive for much of the day, but rolled over and lost about 0.4%. The major damage occurred in big-cap technology names again, with the Nasdaq 100 exchange-traded fund (QQQ) taking a hit of almost 3%, which pushed it under late February's lows. The QQQ is not down for the year, while small caps (IWM) still exhibit some relative strength.
Given the intensity of the selling, breadth was not that bad, with nearly 3,000 advancers to 4,800 decliners. Over 600 stocks hit new 12-month highs, but many of them were in groups like oil, travel, and other reopening plays.
Stocks looked upbeat before the open, but poor ADP jobs numbers and weak bonds, according to the iShares 20 Plus Year Treasury Bond (TLT) , gave the bears some ammunition. The irony of this market is that economic conditions continue to improve, and optimism about the end of the pandemic is growing. The problem is that much of the optimism is priced into the market to some degree, and there is concern that a combination of more stimulus and faster growth will produce the first real inflationary pressures in more than a decade.
Many individual stocks are severely pressured and are looking washed out to some degree, but the ARK funds that were so hot at the peak a few weeks ago are seeing substantial redemptions, and that is causing additional pressure. A good example of stock the ARK (ARKK) recently bought is Zoom Video (ZM) , which has fallen nearly 100 points from the open on Tuesday morning.
The path of least resistance right now is to the downside, but there are plenty of interesting situations that are developing. It is likely that there is still a good supply of liquidity, and sooner or later, it will be looking for a place to go.