Three main indexes all fell more than 1% on Tuesday, with the Nasdaq weighed most by megacap growth companies like Apple Inc. and the tech sector ahead of this week's economic data and Federal Reserve Chair Jerome Powell's remarks.
The U.S. services industry grew slower in February as employment fell, but new orders rose to a six-month high, indicating underlying strength. Another survey found January U.S.-made goods orders fell more than predicted.
Some strategists regarded Tuesday's technology (.SPLRCT), opens new tab sell-off as profit taking for a sector that had risen 56% in 2023.
"Maybe some people are taking chips off the table, taking profits in 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 Charles Schwab senior financial analyst Kevin Gordon.
Craig Fehr, head of investment strategy at Edward Jones in St. Louis, said two reports created a risk-off tone. After a study report showing iPhone sales in China plummeted 24% year-on-year in the first six weeks of 2024 due to competition from Huawei (HWT.UL), Apple (AAPL.O) shares slumped 2.8%. Bloomberg stated that Advanced Micro Devices was unable to offer an artificial intelligence processor for the Chinese market as Washington restricted advanced technology exports to Beijing, hurting the semiconductor sector.
"Stopping is sensible and healthy. "This market is taking a breather after a sharp rise," he remarked. Dow Jones Industrial Average (.DJI) lost 404.64 points, or 1.04%, to 38,585.19. The S&P 500 (.SPX) fell 52.3 points, or 1.02%, to 5,078.65, and the Nasdaq Composite (.IXIC) down 267.92 points, or 1.65%, to 15,939.59.
Along with Powell's speech before Congress on Wednesday and Thursday, investors are eagerly expecting economic data, notably Friday's non-farm payrolls report, for interest rate policy cues. According to CME Group's FedWatch program, most traders expect the first rate drop this year in June.
After the bitcoin development company announced a private offering for $600 million in convertible senior notes to buy bitcoin, Microstrategy (MSTR.O) shares fell 21%. On the NYSE, decliners outpaced advancers 1.40-to-1; on Nasdaq, 1.76-to-1. The S&P 500 had 50 52-week highs and eight lows, while the Nasdaq Composite had 93 and 113. U.S. exchanges traded 13.22 billion shares, up from 11.99 billion in the past 20 days.
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