S&P slides as recovery narrative is questioned and Treasury yields rise The Dow was the only major average in the green for most of the day, but it eventually joined the other indexes in the red by the close. The Nasdaq remained the day's underperformer from the opening to the closing bell. The tug of war on sentiment continues, with the recovery narrative supported by upbeat news on vaccines and widespread expectations for more stimulus. However, inflation worries, the improving growth outlook and the very same stimulus hopes are driving Treasury yields higher, which undercuts equity valuations. ECONOMIC EVENTS: In the U.S., ADP reported private payrolls increased 117,000 in February, which was well below Bloomberg's consensus forecast of 205,000. The final Markit services PMI for February rose 1.5 points to 59.8 from a 58.3 reading in January. However, the ISM services index dropped 3.4 points to a 9-month low of 55.3 in February, missing expectations. In Federal Reserve news, the Fed said in its latest Beige Book that economic activity "expanded modestly" from January to mid-February for most districts, with most businesses remaining optimistic regarding the next 6-12 months as COVID-19 vaccines become more widely distributed. The Fed also noted that employment levels rose in most districts and that nonlabor input costs rose moderately during the period. TOP NEWS: Shares of Dollar Tree ($DLTR) closed 3% higher after the discount retailer reported better than expected fourth quarter earnings, with enterprise same-store sales increasing 4.9% year-over-year on a constant currency basis. In addition, the retailer guided for 600 store openings in fiscal 2021. In other earnings news, Nordstrom ($JWN) shares fell 3.5% despite the department store operator reporting better than expected Q4 earnings and revenue and guiding for fiscal 2021 revenue growth of over 25%. Of note, however, the company said it is taking actions to "significantly reduce inventory levels" in the first quarter and be fully repositioned in the second quarter. On the M&A front, shares of Michaels ($MIK) surged over 22% higher after funds managed by affiliates of Apollo Global ($APO) agreed to acquire the craft goods retailer in a transaction that values the company at an equity value of roughly $3.3B, for a transaction valued at $5B. Under the terms of the agreement, which has been unanimously approved by the Michaels board, Apollo will commence a tender offer to acquire all outstanding shares of Michaels for $22.00 per share in cash. In other M&A news, Las Vegas Sands ($LVS) announced that it entered into definitive agreements to sell its Las Vegas real property and operations, including The Venetian Resort Las Vegas and the Sands Expo and Convention Center, for an aggregate purchase price of approximately $6.25B. Under the terms of the agreement, an affiliate of funds managed by affiliates of Apollo Global will acquire subsidiaries that hold the operating assets and liabilities of the Las Vegas business for approximately $1.05B in cash and $1.2B in seller financing in the form of a term loan credit and security agreement, and VICI Properties ($VICI) will acquire subsidiaries that hold the real estate and real estate-related assets of The Venetian for approximately $4B in cash. Meanwhile, General Motors ($GM) was in focus after Bloomberg reported that Cruise, the self-driving vehicle company majority owned by GM, is in discussions to buy Voyage, an autonomous technology startup. If a deal is reached, it would combine Cruise's engineering and software capabilities with Voyage's presence in the retirement community market, according to Bloomberg. The Wall Street Journal reported that activist investor Starboard Value has taken a stake in Elanco Animal Health ($ELAN) and nominated three directors to the company's board. The exact size of Starboard's stake-and specifically what the fund intends to advocate at Elanco-couldn't be learned, though it tends to make sizable investments in companies it targets, according to the Journal. Additionally, Reuters reported that Samsung ($SSNLF) is evaluating two sites in Arizona and another in New York in addition to Austin, Texas, for a new $17B chip plant. MAJOR MOVERS: Among the noteworthy gainers was Ovid Therapeutics ($OVID), which surged 36.5% after announcing that Takeda ($TAK) has entered into an exclusive agreement under which it will secure global rights at closing from Ovid to develop and commercialize the investigational medicine soticlestat. Also higher was Lyft ($LYFT), which gained 8.2% after raising its Q1 adjusted EBITDA guidance. In addition, KemPharm ($KMPH) jumped 42.8% after announcing FDA approval of its new drug application for Azstarys. Among the notable losers was Vir Biotechnology ($VIR), which dropped 27.6% after the Data and Safety Monitoring Board recommended that the VIR-7831 arm of the NIH's Accelerating COVID-19 Therapeutic Interventions and Vaccines Program Phase 3 clinical trial be closed to enrollment. Also lower was Wendy's ($WEN), which fell 5.5% after reporting quarterly results. Reviewing Wednesday's economic data:The ISM Non-Manufacturing Index fell to 55.3% in February (Briefing.com consensus 58.6%) from 58.7% in January. The dividing line between expansion and contraction is 50.0%. The February reading marks the ninth straight month of growth for the services sector, but it is the slowest pace since May 2020.The key takeaway from the report for a market focusing increased attention on inflation trends, as economic activity picks up, is the upward move in the Prices Index to 71.8% from 64.2% in January. This elevated reading follows on the heels of Monday's ISM Manufacturing Index, which showed the Prices Index at its highest level (86.0%) since May 2008.The ADP Employment Change report estimated 117,000 jobs were added to private-sector payrolls in February (Briefing.com consensus +180,000) following an upwardly revised 195,000 increase (from 174,000) in January.The IHS Markit Services PMI for February was revised higher to 59.8 from 58.3 in the preliminary reading.The weekly MBA Mortgage Applications Index increased 0.5% following a 11.4% drop in the prior week.Russell 2000 +11.8% YTDDow Jones Industrial Average +2.2% YTDS&P 500 +1.7% YTDNasdaq Composite +0.9% YTDMarket SnapshotDow31270.09-121.43(-0.39%)Nasdaq12997.77-361.04(-2.70%)SP 5003819.72-50.57(-1.31%)10-yr Note -29/321.477NYSEAdv 1524 Dec 1683 Vol 1.2 blnNasdaqAdv 1339 Dec 2598 Vol 5.4 blnIndustry WatchStrong: Energy, Financials, IndustrialsWeak: Information Technology, Consumer Discretionary, Communication ServicesMoving the Market-- Nasdaq and growth stocks were hit by valuation-oriented and rotational selling pressure-- Treasury yields moved higher amid lingering growth optimism and inflation concerns -- White House speeds up vaccine timeline by two months -- Energy and financial stocks showed strength Disclosure: I may trade in the ticker symbols mentioned, both long or short. 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