Tech-heavy Nasdaq leads Wall Street lower as megacaps slide
Business
Tech-heavy Nasdaq leads Wall Street lower as megacaps slide
(Reuters) - Wall Street fell on Tuesday, with weakness in mega-cap growth stocks weighing on the Nasdaq as investors assessed a slew of economic data and awaited remarks from Federal Reserve Chair Jerome Powell.
Data showed US services industry growth slowed a bit in February amid a decline in employment, but a measure of new orders increased to a six-month high, pointing to underlying strength in the sector.
The PMI was consistent with continued economic expansion despite 525 basis points worth of interest rate hikes from the Fed since March 2022.
Another survey showed factory orders fell 3.6% in January, compared to estimates of a 2.9% decline.
Traders see a 67.2% chance of the first-rate cut this year arriving in June, as per CME Group's FedWatch tool.
An AI-fueled rally on Wall Street ran out of steam at the start of this week as focus turns to fresh cues on the Fed's monetary policy path after signs of sticky inflation in February dampened hopes of early interest rate cuts.
The benchmark S&P 500 (.SPX) hit a fresh intraday record high on Monday before closing slightly lower in the run-up to Powell's testimony before lawmakers on Wednesday and Thursday.
"I think he's going to continue to reiterate that the narrative is going to be rate cuts may be coming (but) there's no immediate plan to cut them. Thus you see some of the angst in the tech space," said Ken Polcari, chief market strategist at Slatestone Wealth.
Apple (AAPL.O), opens new tab slid 2.8% after a research report showed iPhone sales in China fell 24% year-on-year in the first six weeks of 2024 as the US company faced increased competition from domestic rivals such as Huawei (HWT.UL).
Other mega-cap growth and technology stocks also declined, with Tesla (TSLA.O) down 3.3% after its European Gigafactory near Berlin halted production after a suspected arson attack.
Six of the 11 major S&P 500 sub-indexes declined in early trading, with rate-sensitive sectors such as technology (.SPLRCT) leading losses.
A raft of employment data, including the crucial nonfarm payrolls report, is also due in the coming days.
At 10:10 a.m. ET, the Dow Jones Industrial Average (.DJI) was down 194.04 points, or 0.50%, at 38,795.79, the S&P 500 (.SPX) was down 31.07 points, or 0.61%, at 5,099.88, and the Nasdaq Composite (.IXIC) was down 209.02 points, or 1.29%, at 15,998.49.
Target (TGT.N) jumped 11.7% after the big-ticket retailer forecast annual comparable sales largely above estimates, betting on same-day services, product launches and a new membership program to boost spending.
Microstrategy (MSTR.O) shed 6.8% after the bitcoin development company announced a private offering for $600 million in convertible senior notes, with proceeds to be used to buy bitcoin.
Advancing issues outnumbered decliners by a 1.31-to-1 ratio on the NYSE. Declining issues outnumbered advancers for a 1.44-to-1 ratio on the Nasdaq.
The S&P index recorded 38 new 52-week highs and four new lows, while the Nasdaq recorded 53 new highs and 62 new lows.
