U.S. stocks were tumbling in the final hour of trading on Tuesday as technology shares came under pressure, dragged down by Apple’s continued slump, while investors remained cautious ahead of closely watched remarks by Federal Reserve Chair Jerome Powell and labor-market data, both of which should offer more clues on the central bank’s interest-rate path and the health of the economy.
How stocks are trading
-
The S&P 500
SPX
was down 70 points, or 1.4%, to 5,061. -
The Dow Jones Industrial Average
DJIA
was falling 502 points, or 1.3%, to 38,486. - The Nasdaq Composite was sliding 327 points, or 2.1%, to 15,879.
The three major indexes were on track for back-to-back losses after the S&P 500 and Nasdaq pulled back Monday from record finishes scored at the end of last week.
What’s driving markets
Tuesday’s trading session saw investors taking a cautious tone. So far, the year has been good for markets as investors have navigated moderating inflation, consistent economic growth and uncertainty over the Federal Reserve’s next move on interest rates.
However, until investors see a fresh round of data and speeches on these topics later this week, it’s still a risk-off mood in the financial market — at least for equities. Bitcoin
BTCUSD,
notched a new record high on Tuesday morning, briefly moving past $69,000.
There’s good reason for the scrutiny, said Quincy Krosby, chief global strategist at LPL Financial. “This is an important week for a market that has been pricing in a host, a series, of rate cuts,” she told MarketWatch via phone on Tuesday.
Investors will brace for remarks from Powell, who is expected to deliver monetary-policy updates to the House of Representatives on Wednesday and to the Senate on Thursday, while listening hard for clues on the pace, timing and extent of any interest-rate cuts for the rest of 2024, she said.
Until then, Krosby saw the selloff on Tuesday as a “healthy” consolidation, because investors “need to digest the gains” from last few weeks.
Greg W. Halter, director of research at Carnegie Investment Counsel, also said the pullback was natural, adding that some investors may seize the chance to take profits and shift into the remaining 493 companies in the S&P 500 that are trading at lower valuations.
“The market is broadening out, but the question of debate is can the market [continue to] go higher if you don’t have Microsoft
MSFT,
Apple and Nvidia
NVDA,
being the leaders,” Halter said in a phone interview with MarketWatch on Tuesday.
Kim Forrest, founder and chief investment officer at Bokeh Capital Partners, said this week’s start is reminiscent of last week’s. At that time, the big worry was that the Fed’s preferred PCE inflation gauge, due out at the end of last week, would come in hotter than expected. However, the February inflation numbers were in line with expectations, propelling the S&P 500 and the Nasdaq to their record highs on Friday, according to Dow Jones Market Data.
Now it’s a new week and “we’re back to freaking out,” Forrest said in a phone interview on Tuesday. This time, investors are also awaiting a batch of labor-market data for signs of whether the job market remains resilient, which could discourage policy makers from cutting rates.
In U.S. economic data on Tuesday, the ISM service-sector PMI fell to 52.6% in February from 53.4% in January, marking a bigger-than-expected drop. Still, a number over 50% signals economic expansion, where the index has been since December 2022.
Factory orders also fell 3.6% in January, dragged down by fewer contracts for passenger airplanes from Boeing.
Tuesday also saw pressure from a dip in Apple Inc.’s
AAPL,
shares weighing on the Dow, Nasdaq and S&P 500. The company’s shares were sagging more than 2.9% after a report that iPhone sales in China fell 24% during the first six weeks of the year.
Companies in focus
-
Target Corp. shares
TGT,
+11.28%
were jumping 11.4% on Tuesday afternoon after fourth-quarter earnings from the retailer showed expectation-exceeding metrics like lower markdown rates and lower inventory-related costs. -
MicroStrategy Inc. shares
MSTR,
-15.37%
were falling more than 13%. The business-analytics software company has built up its bitcoin exposure as its primary treasury asset and reaffirmed that approach in a plan to offer convertible debt. The company’s stock ran to a 24-year high on Monday.
Jamie Chisholm contributed.
