NEW YORK: Wall Street fell on Tuesday, with weakness in megacap growth stocks such as Apple and Tesla weighing on the Nasdaq, while 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 new orders for US-manufactured goods dropped more than expected in January.
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 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.
“There’s going to be very few surprises for the market when Jay Powell goes up to Capitol Hill,” said Art Hogan, chief market strategist at B Riley Wealth.
“His message has largely been pretty clear post the meeting we had at the Fed and that is ‘we are going to cut rates at some point this year, it’s just not as soon as you thought’.” Traders see a 67.2% chance of the first rate cut this year arriving in June, as per CME Group’s FedWatch tool.
Among major movers, Apple slid 2.7% 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 .
Other megacap growth and technology stocks also declined, with Tesla down 4.9% after its European Gigafactory near Berlin halted production after a suspected arson attack.
Six of the 11 major S&P 500 sub-indexes declined, with rate-sensitive sectors such as technology leading losses.
A raft of employment data, including the crucial nonfarm payrolls report, is also due in the coming days.
At 11:32 a.m. ET, the Dow Jones Industrial Average was down 230.86 points, or 0.59%, at 38,758.97, the S&P 500 was down 40.95 points, or 0.80%, at 5,090.00, and the Nasdaq Composite was down 265.11 points, or 1.64%, at 15,942.40.
Target jumped 11.3% 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 shed 14.2% 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 1.11-to-1 ratio on the NYSE. Declining issues outnumbered advancers for a 1.54-to-1 ratio on the Nasdaq.
The S&P index recorded 44 new 52-week highs and five new lows, while the Nasdaq recorded 66 new highs and 89 new lows.
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