Mid-day: Mega-caps hold back indices

The S&P 500 is down 0.2% in midday action after starting the session with a 0.5% gain, as growth stocks face renewed selling pressure. The Nasdaq Composite is down 0.3% after being up 1.0% intraday, and the Dow Jones Industrial Average is down 0.1% after being up 0.4% intraday.

There is a lack of trading conviction in the market, as most S&P 500 sectors trade within 0.5% of their flat lines, but the underperformance of the mega-caps is weighing heavily on the market.

The communication services sector (-2.2%), which is showing weakness in Meta Platforms (FB 224.81, -12.27, -5.2%) and Alphabet (GOOG 2786.82, -73.50, -2.6%), is down more than 2.0%. The energy sector is up 1.2%, as oil prices remain above $90 per barrel ($91.37, -0.94, -1.0%), although they are down today.

The Vanguard Mega Cap Growth ETF (MGK 233.77, -1.50, -0.6%) is down 0.6%, while the Invesco S&P 500 Equal Weight ETF (RSP 155.95, +0.22, +0.2%) trades higher by 0.2%.

The lack of dip-buying interest in Meta, and the selling pressure in other growth stocks, is fueling concerns that the recent rally in growth stocks could be a case of a “sell the rip” mindset amid the threat of rising rates.

The 10-yr yield, however, is unchanged at 1.93%, even though National Security Adviser Jake Sullivan said over the weekend that Russia could invade Ukraine “any day now.” The 2-yr yield is down two basis points to 1.29%. The U.S. Dollar Index is up 0.1% to 95.56.

Separately, there’s been plenty of corporate news in the mix, including an airline merger between Spirit (SAVE 24.88, +3.13, +14.4%) and Frontier (ULCC 12.52, +0.13, +1.0%) for $6.6 billion in cash and stock.

Peloton (PTON 28.19, +3.64, +14.6%) is reportedly drawing takeover interest from Amazon.com (AMZN 3188.33, +34.31, +1.1%) and Nike (NKE 145.46, +0.10, +0.1%). Tyson Foods (TSN 97.35, +9.06, +10.3%) and On Semiconductor (ON 62.02, +4.60, +8.0%) are rallying on pleasing earnings news.

Investors did not receive any economic data this morning, but the Consumer Credit report for December will be released at 3:00 p.m. ET.