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Tuesday, July 23, 2024
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Big Tech shares weigh on Wall Street once more

Wall Street declined on Thursday due to concerns that a robust economy might lead the Federal Reserve to maintain higher interest rates for an extended period. The S&P 500 was down 0.3% in afternoon trading, heading for its third consecutive loss.

Big Tech stocks were particularly weak, with the Nasdaq composite down 0.9%. The Dow Jones Industrial Average, which has a smaller emphasis on tech, was up 0.2%.

The pressure on stocks came from the bond market, where yields had risen earlier in the week following a report showing stronger-than-expected growth in US service industries. Yields remained elevated after a Thursday report indicated fewer US workers had applied for unemployment benefits than expected.

While these reports are encouraging for the economy and suggest that a recession may not be imminent, they could also keep inflation elevated.

The Federal Reserve has already raised its main interest rate to the highest level in more than two decades in an effort to slow the economy and reduce inflation to its 2% target. However, the last percentage point of improvement may be the most challenging.

High interest rates negatively impact all types of stocks, but they particularly affect technology companies and others with high growth expectations. These stocks also have a significant influence on the S&P 500.

Apple, the most valuable stock on Wall Street, fell 3.2%, while Nvidia dropped 2.6%. C3.ai plummeted 12.6% after announcing it no longer expects to be profitable in its final fiscal quarter.

In the bond market, the yield on the two-year Treasury slipped to 4.98% from 5.03%. The yield on the 10-year Treasury fell to 4.27% from 4.30%.

In global stock markets, indexes fell in China following discouraging economic data. Hong Kong’s Hang Seng dropped 1.3%, and stocks in Shanghai fell 1.1% as China’s exports declined for the fourth consecutive month. The country’s economic recovery has fallen short of expectations, partly due to the removal of COVID-19 restrictions.

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