2024-03-05 20:07:55
Wall Street stocks fell on Tuesday as weakness in megacap growth stocks such as Apple Inc and the chip sector weighed on the Nasdaq ahead of this week’s round of economic data and remarks from Federal Reserve Chairman Jerome Powell.
Data showed growth in the U.S. services industry slowed in February as employment fell, but a measure of new orders rose to a six-month high, signaling underlying strength in the sector.
Tuesday’s PMI report confirmed continued economic growth despite the Fed’s 525 basis points of interest rate hikes since March 2022.
Another survey showed that new orders for U.S. manufactured goods fell more than expected in January.
An artificial intelligence-fueled rally faded this week as attention turned to upcoming clues regarding the Fed’s monetary policy path, following signs of sticky inflation in February dimmed hopes an early reduction in interest rates.
“Markets are weaker today, with a bit of a riskier tone overall,” said Craig Fehr, chief investment strategist at Edward Jones in St. Louis.
Two reports hurt tech stocks, according to Fehr. A research report showed that iPhone sales in China fell 24% year-on-year in the first six weeks of 2024, as Apple faces increased competition from domestic rivals such as Huawei. Apple shares fell 2.9% following the release of this report.
A Bloomberg News report on Monday depressed the chip sector, he added. Shares of Advanced Micro Devices fell 1.3% following news that its efforts to sell an artificial intelligence chip designed for the Chinese market have been blocked, as Washington cracks down on exports of cutting-edge technology towards Beijing.
Chip competitors fell along with the Philadelphia Semiconductor Index, down 2.8%.
While technology, down 2.7%, led the declines among the S&P 500’s major industry sectors on Tuesday, the sector was still up regarding 10% so far in 2024, following rising 56 % in 2023.
“Some of the weakness we see today in technology is a function of the strength we saw,” Fehr said. “It’s reasonable and even healthy to make a few stops along the way. This market is, to some extent, stopping for breath following what has been a very strong rally.”
The Dow Jones Industrial Average lost 406.15 points, or 1.04%, to 38,583.68 points. The S&P 500 lost 58.51 points, or 1.14 percent, to 5,072.44 and the Nasdaq Composite fell 304.48 points, or 1.88 percent, to 15,903.03.
The benchmark S&P 500 index had hit a new intraday high on Monday before closing slightly lower ahead of Mr. Powell’s testimony before lawmakers on Wednesday and Thursday.
Investors are also awaiting clues on interest rate policy from economic data, including the crucial nonfarm payrolls report, which is due out Friday.
Traders see a 67.2% chance that the first rate cut of the year will occur in June, according to the CME Group’s FedWatch tool.
Seven of the 11 major S&P 500 indexes fell, while energy, up 1%, and consumer staples, up 0.6%, were the biggest gainers.
Among megacapital tech stocks, Tesla shares fell 4% following its European Gigafactory near Berlin shut down production following a suspected arson.
On the positive side, shares of Target jumped more than 12% following the big-box retailer forecast annual comparable sales well above estimates, betting on same-day service, product launches and a new discount program. membership to stimulate spending.
Microstrategy lost 15% following the bitcoin development company announced a private offering of $600 million in convertible senior notes, the proceeds of which will be used to purchase bitcoin.
Declining stocks outnumbered advancing stocks on the NYSE by a ratio of 1.13 to 1; on the Nasdaq, a 1.57-to-1 ratio favored falling stocks.
The S&P 500 recorded 49 new 52-week highs and six new record lows; The Nasdaq Composite recorded 87 new record highs and 99 new record lows.
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