Tech stocks slump again; Nasdaq sustains worst loss since 2020
NEW YORK – Stocks closed broadly lower on Wall Street Tuesday, weighed down by sharp declines in Big Tech stocks that also left the Nasdaq with its worst drop since September 2020.
Investors are busy reviewing the latest round of corporate earnings and are facing a particularly heavy week with results from some of the nation’s biggest companies. The latest corporate report cards are hitting Wall Street amid lingering concerns about rising inflation, interest rate hikes and potential damage to global economic growth.
The S&P 500 fell 120.92 points, or 2.8% to 4,175.20. The benchmark index closed the day with 95% of its stocks losing ground. The Dow Jones Industrial Average fell 809.28 points, or 2.4%, to 33,240.18.
The tech-heavy Nasdaq bore the brunt of the day’s losses. It fell 514.11 points, or 4%, to 12,490.74. That’s its worst drop since Sept. 8, 2020. The index is now down down 20% so far this year as investors shun the ultra-pricey tech sector.
With interest rates set to rise as the Federal Reserve steps up its inflation fight, traders are less and less willing to endure the lofty prices they had been paying for Microsoft, Facebook’s parent company and other tech giants.
Microsoft fell 3.7%. Google’s parent company, Alphabet, fell 3.6% in regular trading and lost another 6% in after-hours trading after reporting results that fell short of anlaysts’ estimates.
More big technology companies are on deck to report earnings this week, including Facebook parent’s company, Meta, on Wednesday, and Apple on Thursday.
Tesla slumped 12.2% over concerns that CEO Elon Musk will be less engaged in running the electric vehicle maker as he buys Twitter, which fell 3.9%.
Retailers and other companies that rely on direct consumer spending also fell broadly. General Motors fell 4.5%, while Nike slipped 5.8%.
General Electric fell 10.3% for one of the sharpest losses on the market after telling investors that inflation and other pressures are weighing on its profit forecast for the year.
Bond yields fell. The yield on the 10-year Treasury fell to 2.73% from 2.82% late Monday.
Energy companies eked out a gain, the only one of the 11 sectors in the S&P 500 to do so. The price of benchmark U.S. crude oil rose 3.2%.
Persistently rising inflation has prompted the Fed to shift its monetary policy in order to aggressively fight inflation. The chair of the Fed has indicated the central bank may hike short-term interest rates by double the usual amount at upcoming meetings, starting next week. It has already raised its key overnight rate once, the first such increase since 2018.
Economists and investors are concerned that the U.S. economy might slow sharply or even fall into a recession because of the big interest-rate increases the Fed is expected to push through.
Gold for June delivery rose $8.10 to $1,904.10 an ounce. Silver for May delivery fell 13 cents to $23.54 an ounce, and May copper fell 1 cent to $4.44 a pound.
The dollar fell to 127.59 Japanese yen from 128.02 yen. The euro fell to $1.0645 from $1.0709.