Tech leads stock slump; bitcoin touches record before falling
NEW YORK — Tumbling tech stocks dragged Wall Street to its worst day in three weeks on Tuesday.
The S&P 500 dropped 1% for its second straight loss after closing last week at an all-time high. The Dow Jones industrial average fell 1%, and the Nasdaq composite index led the market lower with a 1.7% slide.
Apple’s drop of 2.8% was one of the heaviest weights on the market. It’s been struggling on worries about sluggish iPhone sales in China, where tough competition and a faltering overall economy are challenging it.
Apple is one of several major tech stocks that’s bent recently under the weight of loftier expectations after running much higher in price.
Since the start of last year, a select group known as the “Magnificent Seven” has been responsible for the vast majority of the S&P 500’s run to all-time highs.
Drops for several of them were among the heaviest weights on the S&P 500 on Tuesday. Microsoft fell 3%, Amazon slid 1.9% and Tesla dropped 3.9%.
Piling into tech stocks has become one of the most popular moves on Wall Street among both mutual funds and hedge funds, according to strategists at Barclays Capital.
That can raise the risk of sharp drops later, particularly with criticism rising that shares have gotten too expensive.
High-growth stocks have generally been rallying for several reasons, including a frenzy around artificial intelligence technology, but if they “fail to deliver on aggressive expectations, growth investors probably will wind up disappointed,” according to the asset allocation team at GMO, the investment firm co-founded by Jeremy Grantham.
MicroStrategy fell 21.2% after it said it would raise $600 million in debt, which it will use to buy more bitcoin and for “general corporate purposes.”
Bitcoin briefly rose above $69,000 on Tuesday, surpassing its record set in 2021, before pulling back below $63,000. It’s been surging in part because of new exchange-traded funds that offer investors easier access to the cryptocurrency.
Target climbed 12%, helping limit the market’s losses. It reported a bigger jump in profit for the end of 2023 than analysts expected as it held the line on some expenses.
New York Community Bancorp also rose 17.9% to trim its loss for the week so far to 9.3%. The bank is under pressure because of losses tied to investments it has related to commercial real estate. It’s also under heavier regulatory scrutiny because of its purchase of much of Signature Bank, one of the banks that fell in last year’s mini-crisis for the industry.
Several analysts still say NYCB’s problems are probably unique to it, more than a signal of coming trouble for banks broadly. But if interest rates remain high, more pressure could build on the entire industry.
All told, the S&P 500 fell 52.30 points to 5,078.65. The Dow dropped 404.64 points to 38,585.19, and the Nasdaq sank 267.92 points to 15,939.59.
Hopes for coming cuts to interest rates got a boost after a report showed growth for U.S. construction, healthcare and other services industries slowed by more last month than economists expected.
Perhaps more important for the market, the report also said prices paid by services businesses rose at a slower pace in February than in January. A separate report, meanwhile, said U.S. factory orders weakened by more in January than expected.
In the bond market, the yield on the 10-year Treasury fell to 4.13% from 4.22% late Monday.