Megacap weakness pulls Wall Street lower
Wall Street's three major indexes all retreated more than 1 percent on Tuesday, with weakness in megacap growth companies such as Apple 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 US 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 US-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 percent 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 labour market data," said Kevin Gordon, senior investment strategist at Charles Schwab. Two reports helped to create a risk-off tone, said Craig Fehr, head of investment strategy at Edward Jones in St. Louis. Apple shares finished down 2.8 percent after a research report showed iPhone sales in China fell 24 percent 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 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. 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 1.04 percent, to 38,585. The S&P 500 lost 1.02 percent, at 5,079 and the Nasdaq Composite dropped 1.65 percent, to 15,940. Among megacap technology stocks, Tesla shares sank 3.9 percent after its European Gigafactory near Berlin halted production following a suspected arson attack. (Reuters)_____________________________
Last updated: 2024-03-06 HKT 09:37 