Are Stock Valuations Rerating?

The economic news today was very good. But the stock market sold off sharply for the second day in a row led by a 1.90% drop in the Nasdaq, while the S&P 500 fell 1.19% today (chart). That's even though the bond market behaved with the 10-year Treasury yield falling from 4.985% at 8:25 am to 4.851% by the close. But that decline was probably in reaction to the weakness in stock prices.

The stock market decline over the past two days was triggered by disappointing Q3 earnings results and guidance from Google and Facebook that caused communications and technology stocks to drop sharply (chart). On the other hand, Microsoft, IBM, Intel, and Amazon all beat expectations this week.