Wall Street experienced a decline on Tuesday, with weakness in mega-cap growth stocks impacting the Nasdaq as investors assessed economic data and awaited remarks from Federal Reserve Chair Jerome Powell. Economic indicators revealed a slight slowdown in US services industry growth in February, accompanied by a decline in employment. However, a measure of new orders reached a six-month high, indicating underlying strength.
The Purchasing Managers’ Index (PMI) suggested ongoing economic expansion despite the Federal Reserve implementing 525 basis points of interest rate hikes since March 2022. Another survey revealed a 3.6% decline in factory orders in January, exceeding estimates of a 2.9% decrease.
Traders, gauging a 67.2% chance of the first rate cut arriving in June, are closely monitoring the Fed’s monetary policy stance, especially after signs of persistent inflation in February.
An AI-driven rally on Wall Street lost momentum as investors turned their attention to Powell’s upcoming testimony before lawmakers. The S&P 500 hit a new intraday record high before closing slightly lower on Monday.
Apple shares slid 2.8% following a report indicating a 24% year-on-year decline in iPhone sales in China, attributed to increased competition from domestic rivals like Huawei.
Other mega-cap growth and technology stocks, including Tesla, experienced declines. Tesla’s European Gigafactory near Berlin halted production due to a suspected arson attack.
Rate-sensitive sectors, particularly technology, led losses, with six of the 11 major S&P 500 sub-indexes declining in early trading.
Target, on the other hand, saw a notable 11.7% jump after forecasting annual comparable sales above estimates, emphasizing same-day services, product launches, and a new membership program.
Microstrategy witnessed a 6.8% decline after announcing a private offering for $600 million in convertible senior notes, intending to use proceeds to purchase bitcoin.
As employment data, including the crucial nonfarm payrolls report, is anticipated in the coming days, the market continues to react to various economic factors and central bank signals.
At mid-morning, the Dow Jones Industrial Average was down 0.50%, the S&P 500 was down 0.61%, and the Nasdaq Composite was down 1.29%. The market recorded a mix of new highs and lows across indices.
