Indices are down, Nasdaq is under pressure

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Key points:

  • All three major Wall Street indexes fell more than 1%.
  • The Nasdaq Composite fell 1.65%, hit hardest by declines in Apple and other technology stocks.
  • A decline in new orders for US-made goods in January indicates risks to further economic development.

All three major Wall Street indexes were down more than 1% on Tuesday. The biggest impact on the Nasdaq came from declines in big technology stocks such as Apple Inc. and weakness in the chip sector. This comes ahead of the release of important economic data this week, as well as a speech from Federal Reserve Chairman Jerome Powell.

The Dow Jones Industrial Average lost 404.64 points (1.04%) to close at 38,585.19. The S&P 500 index fell 52.3 points (1.02%) to 5,078.65. The Nasdaq Composite fell 267.92 points (1.65%) to 15,939.59.

Thus, the US stock market ended the day in the red zone.

First economic data of the week

Economic indicators released on Tuesday, March 5, showed a mixed picture. On the one hand, the purchasing managers’ index in the US non-manufacturing sector for February showed a slowdown in growth rates due to a decline in employment. On the other hand, new orders rising to a six-month high indicates continued underlying strength in the sector.

Overall, the reports confirm the resilience of economic growth despite the Fed’s tightening of monetary policy, which resulted in a 525 basis point rate hike from March 2022. At the same time, data on a decrease in the volume of new orders for American-made goods in January indicate the presence of some risks for further economic development.

Tech stocks fell, but energy rose

Apple Inc. shares fell 2.8% after a research report reported a 24% year-on-year decline in iPhone sales in China in the first six weeks of 2024.

Analysts attribute this drop to increased competition from Chinese companies such as Huawei.

The chip sector also suffered losses after it was reported that Advanced Micro Devices (AMD) faced obstacles in its attempt to sell an artificial intelligence chip to China. This is due to the tightening of export restrictions imposed by the United States against Beijing.

The S&P 500 hit a new intraday record high on Monday, but then closed slightly lower. Analysts believe that this is a temporary stop after the sharp rise in the market.

As a result, eight of the 11 major S&P 500 industry indexes declined. Technology indexes fell 1.2% and consumer discretionary indexes fell 1.3%. The energy sector rose 0.7% to lead the gainers, followed by consumer staples, which rose 0.3%.

Thus, the US stock market is currently experiencing a correction after a period of sustained growth.


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