NEW YORK (AP) — U.S. stocks have fallen further from Tuesday's record as declines in big tech stocks weighed on Wall Street.
The S&P 500 fell 0.8% in intraday trading, marking its second consecutive year of decline after closing at a record high last week. As of 11 a.m. ET, the Dow Jones Industrial Average was down 236 points, or 0.6%, and the Nasdaq Composite was down 1.7%.
Apple's 2.7% decline was one of the biggest weights in the market. The company has been struggling due to concerns about weak iPhone sales in China due to stiff competition and the overall economic downturn.
Apple and some of the other Big Tech stocks that drove record gains on Wall Street have struggled to live up to the lofty expectations needed to justify the big jumps in their stock prices. Microsoft's 2.8% drop, Amazon's 1.8% drop and Tesla's 4.9% drop were also the biggest declines in the S&P 500.
Buying more 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. This can increase the risk of a sharp decline later when momentum is broken.
MicroStrategy fell 11.6% after announcing it would raise $600 million in debt and use the proceeds to buy more Bitcoin and “general corporate purposes.”
Bitcoin briefly rose above $69,000 on Tuesday, surpassing the record set in 2021, but has since fallen below $67,000. Thanks to new exchange-traded funds that give investors easier access to cryptocurrencies, their prices have soared. It has almost tripled in the last 12 months.
Target helped limit market losses after rising 11.7%. The company reported that its profit at the end of 2023 was significantly higher than analysts expected, as it curbed some expenses.
New York Community Bancorp also rose 10.3%, a day after falling 23%. The bank is under pressure due to losses related to investments related to commercial real estate. It is also facing increased regulatory scrutiny after acquiring most of Signature Bank, one of the banks that failed during last year's industry crisis.
Analysts still said NYCB's problems are more likely to be unique to NYCB rather than a sign of a tsunami for banks in general, especially following last year's efforts by the U.S. government to support the industry. ing. But if interest rates remain high, that could put further pressure on the industry as a whole.
Morning reports showed that growth in U.S. construction, health care and other services industries slowed last month than economists expected, raising hopes for future interest rate cuts.
Perhaps more importantly for the market, the report found that prices paid by service companies rose at a slower pace in February than in January. Meanwhile, another report said U.S. factory orders fell more than expected in January.
Wall Street's hope is that the economy will continue to perform well, but not at a pace strong enough to continue to put upward pressure on inflation. Traders are hoping the Federal Reserve will cut interest rates this year, but it has indicated it will only do so if inflation cools decisively toward its 2% target.
Tuesday's report raised expectations among traders that the U.S. Federal Reserve would begin lowering interest rates in June. The Fed's key interest rate is at its highest level since 2001 in hopes of curbing inflation. The cuts, if realized, would ease pressure on the economy and financial system.
Fed Chairman Jerome Powell is scheduled to testify before Congress later this week, which could further shake up expectations about when the Fed will start cutting interest rates.
In the bond market, the yield on the 10-year U.S. Treasury note fell to 4.14% from 4.22% late Monday.
In overseas stock markets, Hong Kong's Hang Seng Index fell 2.6% after China's prime minister said the country's economic growth target for this year was around 5%, as expected. .
Li Qiang also spoke at the opening ceremony of China's National People's Congress, saying that the Chinese government will raise 1 trillion yuan to fill funding gaps, support financially strapped local governments, and invest in both advanced technology and industry. ($139 billion) in long-term debt. in social support and education.
However, the government's intention to keep the budget deficit to 3% of China's overall economy may have disappointed investors who had expected more aggressive action.
Stocks in Shanghai rose 0.3%, while indexes in most other parts of the world fell modestly.
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AP Business Writers Elaine Kurtenbach and Matt Ott contributed.
