Market Recap: Tuesday, April 6

Stocks traded lower on Tuesday as traders took a pause after Monday's record-setting rally. The S&P 500 reached yet another intraday high before closing in the red. Each of the Dow and Nasdaq also dipped, with the former reversing some gains after reaching its own intraday and record high on Monday. Head of Global Asset Allocation at Wells Fargo Investment Institute, Tracie McMillion and Sanders Morris Harris CEO George Ball joined Yahoo Finance Live.

Video Transcript

SEANA SMITH: First, let's, though, let's go to Jared Blikre because we have some selling action here into the close. Jared, all three major averages now lower. The NASDAQ was the last here to turn into negative territory.

JARED BLIKRE: That's right, but I wouldn't call it a deep sell-off. Let's take a look at the YFi Interactive and check out the price action for the day. Now, as you said, all the majors are in the red. The Russell 2000 had been a leader. It's also in the red. Here's what the Dow was looking like for the day. And we can see just touching session lows a minute ago. But that's only down about 122 points. And then the NASDAQ, which had been green most of the day, also sinking to session lows in the final minutes here. But just to reiterate, a pretty low volume-- pretty low volatility day.

Now, inside the market, we're seeing the mega caps now largely in the red, except for Apple, holding on to about 14 basis points. Facebook off nearly 1%, Google off half a percent. And that's coming off of those record highs yesterday, along with Microsoft, by the way, so just giving back a little bit of those gains. Now we want to check in on some of the travel stocks. Those got a nice boost yesterday. And continuing those gains today, we had Norwegian Cruise Lines setting up for a potential July reopening of the US market. It's up 11%, nearly 12% this week, two days in.

Also checking in on the Archegos stock, we have the discoveries, the B shares and the A shares still kind of out of whack. One's down six, the other's up four. But Viacom, after that huge block sale yesterday, that's up 3%. So maybe the worst is behind us in that regard. We got to check in on the meme stocks as well, because we're seeing eyes and ears moving. I haven't said that in a while. We had eyes in the upper up-- in the upper left-- that's up 27%-- and ears up 7%. I just kind of like saying that.

And well, OK, these aren't stocks, but we're going to check out the crypto space into the close. Just checked in with Zack Guzman a few minutes ago, but check out XRP, up 28%, 66% over the last two days. Here's the closing bell on Wall Street.

[BELL]

ADAM SHAPIRO: All right, we've got the gavel. We've got a closing bell. Not so much of a sell-off. I mean, the Dow was off. It's going to settle down about 100 points. But the S&P 500 is going to be down about four points. We're going to have NASDAQ off by about seven points. Some of the sectors, as Jared was just talking about, when we were talking about energy yesterday, it was up dramatically. In fact, year to date, it's up over 30%. Today, it was off by about a quarter of a percent.

Let's go to the guests and talk about some of the points they're making regarding these markets. And I want to start with you, if possible, Tracy, especially something you pointed out that made my eyes Bug out. You said-- and I'm going to quote-- the near 40-year bull market in bond prices is winding down. Interest rates are expected to rise modestly and then remain near historical lows, negating opportunity for significant capital gains in fixed income. What does that mean for the average investor? Tracie, you there?

TRACIE MCMILLION: --start to rise the bond prices are likely to fall. And so those falling bond prices make bonds less attractive for investors than equities. So we see more benefit to owning equities here than most fixed income categories. So we're actually taking some assets from our fixed income in our diversified portfolios, adding that to our equity allocations. And we think that that is going to benefit investors more going forward.

SEANA SMITH: George, how are you looking at the recent moves that we've seen in the market? Because yes, we had a slight move to the downside today. But we're actually not too far from yesterday's record highs. Any thoughts there that there's a little bit too much optimism in the market today?

GEORGE BALL: The market today was meandering, perfect word, meandering. It didn't go any place. It was nice for those of us in the business or in some commissions, but didn't have any purpose other than that. Clearly, the market today is telling you don't try to bend the trend. There's an upward bias to the market. It's a fairly strong upward bias.

And until it breaks, you want to, as Tracie said, I think be heavily in equities. But when prices do break, the market clearly is seeking some form of new leadership that I don't think that a smart investor would be wise to buy a dip quickly. Keep your equity positions. Don't bend the trend. It's upward right now. But when it turns, be cautious. Take money out of equities in the very short denominated, very short duration fixed income securities.

ADAM SHAPIRO: OK, but George, something you said that got my eyes wide open had to do with retail investors potentially getting burned. Yesterday, I had a guest on who said that 30% of people got a stimulus check had invested either in equities, things like GameStop, or in crypto. You worry there's a lot of speculation out there that's going to end with a Hiroshima-sized bad news. Why?

GEORGE BALL: A statistic-- statistics can lie. And liars can use statistics. But since the middle part of November, penny stocks, stocks selling between $0.01 a share, $0.99 a share, the dregs of the corporate universe, most of them unprofitable-- our firm would require people to fill out a form before they bought these low-priced stocks-- are up 141%. 4 and 1/2 months, 141%-- that's something like 370% annualized.

And it doesn't take a clairvoyant to see that that's a recipe for disaster coming down the pike. There are retail investors piling into penny stocks mindlessly. And that always ends in an avalanche, and avalanches go downhill. It's a very worrisome sign we need to be careful of. It's not something that gives us long-term comfort.

SEANA SMITH: Tracie, how about the leadership in the market? We've seen over the last several trading days growth come back into favor, investors finding reason to buy some of those names that were being up over the last couple of weeks. Are you-- do you think this rotation that we've seen in leadership over the last week or two, is that going to stick here? Is tech going to be one of the winners at least in the short term?

TRACIE MCMILLION: So we do think it will be one of the winners over the course of the next three to six months at least. And that has to do with increased growth in the economy. So as we see very strong growth this year, the strongest growth we've seen in 35 years-- [MUTED] We also like cyclical sectors.

ADAM SHAPIRO: George-- let's wrap this up with George. And as an investor who's looking to go forward, we had Deutsche Bank up.

TRACIE MCMILLION: And then as interests arise--

ADAM SHAPIRO: Hold on a second there, Tracie. I think we're having a technical issue with your shot, so I want to go to George. Deutsche Bank was warning that we could see a 10% pullback before the end of the summer. That's to be expected. That shouldn't frighten people away from equities, should it?

GEORGE BALL: It should not frighten people away from equities if it's bounded 10% on the downside. I think what Deutsche Bank was trying to point out is that the market could go down 10%. That's not worrisome. That's normal. That's an everyday event. If the market goes down 10% and then kept going down for whatever reason-- and there's some very valid reasons why it could-- that that could cause particularly margined portfolios.

And everybody's portfolio, even without margin, you get hurt very, very sharply. The S&P is at 4,000. Does it go to 5,000 next or to 3,000? There's reason to think that the downside risk buyouts outweigh the upside potential at this particular moment in time. 10% is not Armageddon. 30% or 40% would be a very taxing, very difficult event, and it's possible.