Tech Sell-Off Slams Stock Market: Indexes Tumble After Seven-Day Rally
Thursday, Nov 28, 2024 12:20 am ET
3min read The stock market today experienced a significant downturn, with indexes sliding as a tech sell-off ended a seven-day winning streak. The S&P 500 and Nasdaq Composite both closed lower, snapped a recent rally, and sparked concerns about the tech sector's outlook. This article delves into the factors driving today's market movements and explores potential implications for investors.
Wednesday's market session saw the S&P 500 drop 0.4%, its first loss in more than a week, as the Nasdaq Composite tumbled 0.6%. The tech-heavy index had enjoyed a seven-day winning streak prior to today's sell-off. The Dow Jones Industrial Average also finished the day in the red, down 0.3%, but remained near record highs.
The tech sector was the primary drag on the market, with Nvidia, Microsoft, and Broadcom leading the decline. Nvidia, a semiconductor giant, fell 1.2%, while Microsoft and Broadcom lost 1.2% and 3.1%, respectively. The sell-off in tech stocks, driven by concerns about earnings and valuation, weighed heavily on the broader market.
Investors also had their eyes on new reports on the economy and inflation Wednesday. The U.S. economy expanded at a healthy 2.8% annual pace from July through September, according to the Commerce Department, leaving its original estimate of third-quarter growth unchanged. The growth was driven by strong consumer spending and a surge in exports. The update followed a report Tuesday from the Conference Board that said confidence among U.S. consumers improved in November, but not by as much as economists expected.
Consumers, though resilient, are still facing pressure from inflation. The latest update from the U.S. government shows that inflation accelerated last month. The personal consumption expenditures index, or PCE, rose to 2.3% in October from 2.1% in September. Overall, the rate of inflation has been falling broadly since it peaked more than two years ago. The PCE, which is the Federal Reserve's preferred measure of inflation, was just below 7.3% in June of 2022. Another measure of inflation, the consumer price index, peaked at 9.1% at the same time.
The latest inflation data, though, is a sign that the rate of inflation seems to be stalling as it falls to within range of the Fed's target of 2%. The central bank started raising its benchmark interest rate from near zero in early 2022 to a two-decade high by the middle of 2023 and held it there in order to tame inflation. The Fed started cutting its benchmark interest rate in September, followed by a second cut in November. Wall Street expects a similar quarter-point cut at the central bank's upcoming meeting in December.
"Today's data shouldn't change views of the likely path for disinflation, however bumpy," said David Alcaly, lead macroeconomic strategist at Lazard Asset Management. "But a lot of observers, probably including some at the Fed, are looking for reasons to get more hawkish on the outlook given the potential for inflationary policy change like new tariffs."
President-elect Donald Trump has said he plans to impose sweeping new tariffs on Mexico, Canada and China when he takes office in January. That could shock the economy by raising prices on a wide range of goods and accelerating the rate of inflation. Such a shift could prompt the Fed to rethink future cuts to interest rates.
Treasury yields slipped in the bond market. The yield on the 10-year Treasury fell to 4.25% from 4.30% late Tuesday. The yield on the two-year Treasury, which more closely follows expected actions by the Fed, fell to 4.22% from 4.25% late Tuesday.
U.S. markets will be closed Thursday for Thanksgiving, and will reopen for half a day Friday.
The recent slide in the stock market can be attributed to a combination of factors, including concerns about tech sector earnings and valuation, as well as geopolitical risks. The tech sell-off, led by Nvidia, Microsoft, and Broadcom, snapped a seven-day winning streak for the S&P 500 and Nasdaq. Today's market downturn serves as a reminder that even in the face of a strong bull market, investors should remain vigilant and adapt to changing market conditions.
As investors weigh the implications of today's market movements, they should consider the broader investment landscape and potential opportunities. The tech sector's recent pullback may present a buying opportunity for long-term investors, while other sectors, such as financials and consumer staples, could offer refuge from market volatility. A balanced and diversified investment strategy, informed by a comprehensive analysis of economic, political, and technological factors, can help investors navigate market fluctuations and capture long-term growth.
In conclusion, the stock market today experienced a significant downturn, with indexes sliding as a tech sell-off ended a seven-day winning streak. The tech sector's recent pullback, driven by concerns about earnings and valuation, weighed heavily on the broader market. As investors assess the implications of today's market movements, they should consider the broader investment landscape and potential opportunities. A balanced and diversified investment strategy, informed by a comprehensive analysis of economic, political, and technological factors, can help investors navigate market fluctuations and capture long-term growth.
Wednesday's market session saw the S&P 500 drop 0.4%, its first loss in more than a week, as the Nasdaq Composite tumbled 0.6%. The tech-heavy index had enjoyed a seven-day winning streak prior to today's sell-off. The Dow Jones Industrial Average also finished the day in the red, down 0.3%, but remained near record highs.
The tech sector was the primary drag on the market, with Nvidia, Microsoft, and Broadcom leading the decline. Nvidia, a semiconductor giant, fell 1.2%, while Microsoft and Broadcom lost 1.2% and 3.1%, respectively. The sell-off in tech stocks, driven by concerns about earnings and valuation, weighed heavily on the broader market.
Investors also had their eyes on new reports on the economy and inflation Wednesday. The U.S. economy expanded at a healthy 2.8% annual pace from July through September, according to the Commerce Department, leaving its original estimate of third-quarter growth unchanged. The growth was driven by strong consumer spending and a surge in exports. The update followed a report Tuesday from the Conference Board that said confidence among U.S. consumers improved in November, but not by as much as economists expected.
Consumers, though resilient, are still facing pressure from inflation. The latest update from the U.S. government shows that inflation accelerated last month. The personal consumption expenditures index, or PCE, rose to 2.3% in October from 2.1% in September. Overall, the rate of inflation has been falling broadly since it peaked more than two years ago. The PCE, which is the Federal Reserve's preferred measure of inflation, was just below 7.3% in June of 2022. Another measure of inflation, the consumer price index, peaked at 9.1% at the same time.
The latest inflation data, though, is a sign that the rate of inflation seems to be stalling as it falls to within range of the Fed's target of 2%. The central bank started raising its benchmark interest rate from near zero in early 2022 to a two-decade high by the middle of 2023 and held it there in order to tame inflation. The Fed started cutting its benchmark interest rate in September, followed by a second cut in November. Wall Street expects a similar quarter-point cut at the central bank's upcoming meeting in December.
"Today's data shouldn't change views of the likely path for disinflation, however bumpy," said David Alcaly, lead macroeconomic strategist at Lazard Asset Management. "But a lot of observers, probably including some at the Fed, are looking for reasons to get more hawkish on the outlook given the potential for inflationary policy change like new tariffs."
President-elect Donald Trump has said he plans to impose sweeping new tariffs on Mexico, Canada and China when he takes office in January. That could shock the economy by raising prices on a wide range of goods and accelerating the rate of inflation. Such a shift could prompt the Fed to rethink future cuts to interest rates.
Treasury yields slipped in the bond market. The yield on the 10-year Treasury fell to 4.25% from 4.30% late Tuesday. The yield on the two-year Treasury, which more closely follows expected actions by the Fed, fell to 4.22% from 4.25% late Tuesday.
U.S. markets will be closed Thursday for Thanksgiving, and will reopen for half a day Friday.
The recent slide in the stock market can be attributed to a combination of factors, including concerns about tech sector earnings and valuation, as well as geopolitical risks. The tech sell-off, led by Nvidia, Microsoft, and Broadcom, snapped a seven-day winning streak for the S&P 500 and Nasdaq. Today's market downturn serves as a reminder that even in the face of a strong bull market, investors should remain vigilant and adapt to changing market conditions.
As investors weigh the implications of today's market movements, they should consider the broader investment landscape and potential opportunities. The tech sector's recent pullback may present a buying opportunity for long-term investors, while other sectors, such as financials and consumer staples, could offer refuge from market volatility. A balanced and diversified investment strategy, informed by a comprehensive analysis of economic, political, and technological factors, can help investors navigate market fluctuations and capture long-term growth.
In conclusion, the stock market today experienced a significant downturn, with indexes sliding as a tech sell-off ended a seven-day winning streak. The tech sector's recent pullback, driven by concerns about earnings and valuation, weighed heavily on the broader market. As investors assess the implications of today's market movements, they should consider the broader investment landscape and potential opportunities. A balanced and diversified investment strategy, informed by a comprehensive analysis of economic, political, and technological factors, can help investors navigate market fluctuations and capture long-term growth.
Disclaimer: the above is a summary showing certain market information. AInvest is not responsible for any data errors, omissions or other information that may be displayed incorrectly as the data is derived from a third party source. Communications displaying market prices, data and other information available in this post are meant for informational purposes only and are not intended as an offer or solicitation for the purchase or sale of any security. Please do your own research when investing. All investments involve risk and the past performance of a security, or financial product does not guarantee future results or returns. Keep in mind that while diversification may help spread risk, it does not assure a profit, or protect against loss in a down market.