The Nasdaq Composite declined 1.8% on Friday, and yet it was still a pretty darn good day for the broader market as the S&P 500 declined less than 0.1%. Essentially, what was taken from the technology sector was given to the financial and energy sectors, which increased 1.9% and 2.5%, respectively.
It was a vintage sector rotation trade and the early leanings this morning suggest there might be more of it today.
To wit, the Nasdaq 100 futures are down 36 points and are trading 0.7% below fair value, while the S&P 500 futures are down only three points and are trading 0.1% below fair value. As an aside, the Nasdaq 100 futures had been down as many as 70 points earlier.
The weight of the heavily-weighted technology sector is clearly holding back the broader market, but as of yet, it is not derailing the broader market as a 1.7% jump in oil prices to $46.58 per barrel is offering some offsetting support given the residual belief that it should translate into more gains for the energy sector.
That is a key consideration and it is the trading dynamic that will be watched closely as market participants will be looking to see if other sectors can continue to pick up the tech sector's slack or whether that slack upends investor sentiment and precipitates broader selling interest.
Naturally, there will be some tremendous attention on the high-five grouping of Apple (AAPL), Alphabet (GOOG), Microsoft (MSFT), Amazon (AMZN), and Facebook (FB), all of which saw some heavy selling pressure on Friday that has carried over this morning.
AAPL, for one, is down 1.6% in pre-market action, with a downgrade of the stock by Mizuho to Neutral from Buy contributing to the losses.
Global markets have taken notice of last Friday's abrupt shift in trading tone for the technology sector and have traded lower today in its wake.
The sell-off of the technology sector, however, has yet to prompt any meaningful safe-haven buying interest in the Treasury market.
The yield on the 10-yr note is actually up a basis point today to 2.21%. That weak disposition is a signpost for some that there isn't any palpable sense of fear yet about the aggressive distribution that has affected the technology group.
The Treasury market might perk up if the broader stock market breaks down, but for now, it's behaving as if it's an impartial bystander.
Some of those trading reservations in the Treasury market could be attributed to the specter of this week's FOMC meeting. The Federal Reserve will be making a policy announcement on Wednesday that will be accompanied by updated economic and interest rate projections, as well as a press conference with Fed Chair Yellen.
The FOMC is widely expected to raise the target range for the fed funds rate this week, so the source of intrigue for the market at the moment revolves around the projections and the qualitative tone Ms. Yellen adapts at the press conference.
There won't be any economic data of note for the market to digest today, yet the PPI, CPI and Retail Sales reports for May will all be out before the FOMC decision on Wednesday.
On the corporate side of things, the big news this morning is that General Electric (GE) made an announcement that a new CEO will take over for Jeff Immelt, effective August 1, 2017. Mr. Immelt will be retiring at the end of the year and will be succeeded by John Flannery, current President and CEO of GE Healthcare. Shares of GE are up 3.6% in pre-market action.