S&P 500 Drops 0.7% as Tech Stocks Retreat, Treasury Yields Rise

The U.S. stock market faced a challenging start to September, with the S&P 500 index experiencing two consecutive days of declines. The market's downward trend was driven by a significant pullback in large-cap technology stocks and an increase in the 10-year U.S. Treasury yield.

The S&P 500 index ended the day with a 0.7% decline, after earlier dropping by as much as 1.5%. Eight out of the 11 sectors in the index finished the day in the red, with real estate stocks, which are sensitive to interest rates, leading the losses. The Nasdaq-100 index, which is heavily weighted towards technology stocks, fell by 0.8% and hovered near its 50-day moving average for the first time since February. The seven major technology stocks, often referred to as the "Magnificent Seven," declined by 1.1%.

Nvidia, a prominent semiconductor company, led the declines in the S&P 500 index, closing down 2% to its lowest level since late July. This was the first time the stock had fallen below its 50-day moving average since May, dragging down the broader semiconductor sector. The Philadelphia Semiconductor Index fell by 1.1%.

Market analysts attributed the sell-off to a combination of factors. Some suggested that the market had become overbought in the summer months, leading to profit-taking by investors. Others pointed to concerns about the upcoming September, which historically has been the weakest month for U.S. stocks. Institutional investors typically rebalance their portfolios during this period, while retail buying slows down and corporate buying decreases, leading to increased market volatility.

Investors are also keeping a close eye on upcoming economic data releases, including the highly anticipated non-farm payrolls report scheduled for Friday. Additionally, two major technology companies are set to report their earnings later this week, with Salesforce Inc. scheduled to report on Wednesday and Broadcom on Thursday.

At the close of trading, the S&P 500 index was down 0.69% at 6,415.54 points, while the Dow Jones Industrial Average fell by 0.55% to 45,295.81 points. The Nasdaq Composite index ended the day 0.82% lower at 21,279.63 points.