Home Editor's Picks Tech-heavy Nasdaq leads Wall Street lower as megacaps, chips slide

Tech-heavy Nasdaq leads Wall Street lower as megacaps, chips slide


Tech-heavy Nasdaq leads Wall Street lower as megacaps, chips slide By Reuters

Breaking News



Published Mar 05, 2024 05:21AM ET
Updated Mar 05, 2024 07:21PM ET

© Reuters. FILE PHOTO: Traders work on the floor at the New York Stock Exchange (NYSE) in New York City, U.S., February 23, 2024. REUTERS/Brendan McDermid/File Photo

By Sinéad Carew and Bansari Mayur Kamdar

(Reuters) -Wall Street three major indexes all retreated more than 1% on Tuesday, with weakness in megacap growth companies such as Apple Inc and the chip sector weighing most on the Nasdaq ahead of this week’s crop of economic data and remarks from Federal Reserve Chair Jerome Powell.

Tuesday’s economic data was a mixed bag showing slower U.S. services industry growth in February as employment declined while a measure of new orders grew to a six-month high, signaling underlying strength in the sector.

The Purchasing Managers Index report on Tuesday confirmed continued economic growth despite 525 basis points worth of interest rate hikes from the Fed since March 2022.

Another survey showed new orders for U.S.-manufactured goods dropped more than expected in January.

Some strategists saw the technology sell-off on Tuesday as the result of profit taking for a sector which had recently rallied after rising 56% in 2023.

“Maybe some people are taking chips off the table, taking some profits in the high flying areas, in conjunction with what is probably justified nerves before Powell speaks and before we get the big slew of labor market data,” said Kevin Gordon, senior investment strategist at Charles Schwab (NYSE:SCHW).

Two reports helped to create a risk-off tone, said Craig Fehr, head of investment strategy at Edward Jones in St. Louis.

Apple shares (NASDAQ:AAPL) finished down 2.8% after a research report showed iPhone sales in China fell 24% year-on-year in the first six weeks of 2024 as Apple faced increased competition from domestic rivals such as Huawei.

Also the chip sector was battered after Bloomberg News reported that Advanced Micro Devices (NASDAQ:AMD) hit a roadblock in its efforts to sell an artificial intelligence chip tailored for the Chinese market as Washington cracks down on advanced technology exports to Beijing.

Chip rivals fell in sympathy with the Philadelphia semiconductor index, which closed down 2%.

Fehr also attributed some of Tuesday’s weakness to recent rallies. The benchmark S&P 500 had hit a fresh intraday record high on Monday before closing slightly lower.

“It’s reasonable and even healthy to take some pit stops along the way. This market is, to a degree, stopping for a breather after what’s been a very sharp run higher,” he said.

The Dow Jones Industrial Average fell 404.64 points, or 1.04%, to 38,585.19. The S&P 500 lost 52.3 points, or 1.02%, at 5,078.65 and the Nasdaq Composite dropped 267.92 points, or 1.65%, to 15,939.59.

Eight of the 11 major S&P 500 industry indexes declined, with technology ending down 1.2% and consumer discretionary falling 1.3%. Energy, up 0.7%, was the biggest gainer followed by consumer staples, which rose 0.3%.

Along with Powell’s testimony before lawmakers on Wednesday and Thursday, investors are also anxiously awaiting more clues about interest rate policy from economic data, including the crucial non-farm payrolls report, due out on Friday.

The majority of traders see the first rate cut this year in June, as per CME Group’s (NASDAQ:CME) FedWatch tool.

Among megacap technology stocks, Tesla (NASDAQ:TSLA) shares sank 3.9% after its European Gigafactory near Berlin halted production following a suspected arson attack.

On the bright side, Target shares rallied 12% after the retailer forecast annual comparable sales largely above estimates, betting on same-day services, product launches and a new membership program to boost spending.

Microstrategy (NASDAQ:MSTR) shares tumbled 21% after the bitcoin development company announced a private offering for $600 million in convertible senior notes, with proceeds to be used to buy bitcoin.

Declining issues outnumbered advancers on the NYSE by a 1.40-to-1 ratio; on Nasdaq, a 1.76-to-1 ratio favored decliners.

The S&P 500 posted 50 new 52-week highs and eight new lows; the Nasdaq Composite recorded 93 new highs and 113 new lows.

On U.S. exchanges 13.22 billion shares changed hands compared with the 11.99 billion average for the last 20 sessions.

Tech-heavy Nasdaq leads Wall Street lower as megacaps, chips slide

Our Apps

Terms And Conditions
Privacy Policy
Risk Warning
Do not sell my personal information

© 2007-2024 Fusion Media Limited. All Rights Reserved.

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.

Related News