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U.S. stocks on Tuesday deepened their slump, with growth names taking it on the chin on the back of a slide in shares of Tesla (TSLA) and Apple (AAPL). Meanwhile, cryptocurrencies were back in the spotlight after bitcoin (BTC-USD) briefly scaled a new record high more than two years after setting its previous peak.
The tech-heavy Nasdaq Composite (COMP.IND) led losses among the three major averages, sliding 2.00% to 15,883.96 points into the final hour of trading. The benchmark S&P 500 (SP500) retreated 1.29% to 5,064.74 points, while the blue-chip Dow (DJI) was lower by 1.21% to 38,516.57 points.
Of the 11 S&P sectors, nine were in the red, led by heavyweight names Technology and Consumer Discretionary.
Markets had ended lower on Monday, as Wall Street’s bull run took a bit of a breather. Last week, the Nasdaq (COMP.IND) finally took out a new record high, while the S&P (SP500) closed above the historic 5,100 points mark for the first time ever. Moreover, the index has now posted gains in sixteen of the last eighteen weeks, something not seen since 1971 according to Deutsche Bank.
“Any way you slice it, the market has been remarkably resilient so far this year … The lesson from history is new market highs tend to be a good signal, as long as stocks aren’t egregiously overvalued, or a recession isn’t around the corner. Although we see pockets of speculation and the tech sector could be due for a breather, we don’t see a bubble. The three-year outperformance of the tech sector to the S&P 500 (SP500) is just above 30%. This is roughly in line with the 30-year average and far from the peak of just above 250% seen in March 2000,” Keith Lerner, co-chief investment officer at Truist, said on Monday.
“The equity rally since the October 2023 price low has also been broader than many investors perceive. Moreover, more than 80% of global markets are in uptrends. The weight of the evidence suggests the primary market trend remains positive, even if one should still expect normal pullbacks along the way,” Lerner added.
On Tuesday, Tesla (TSLA) declined almost 5% and was among the top percentage losers on the Nasdaq (COMP.IND) and the S&P (SP500), after a suspected arson attack led to a full evacuation at the electric vehicle giant’s Gigafactory in Germany.
Apple (AAPL) lost ground by nearly 3%. According to Counterpoint Research, the tech behemoth’s iPhone sales in China fell 24% Y/Y in the first six weeks of this year. Wedbush analyst Dan Ives, who is one of the most bullish Apple (AAPL) analysts on Wall Street, said that sentiment surrounding the stock had become a bit of a “horror show” in recent weeks.
Target (TGT) was a bright spot, with the stock the top percentage gainer on the S&P (SP500). The big-box retailer’s quarterly results and guidance impressed investors.
Aside from the weakness in tech and some earnings reports, the big focus on Tuesday was bitcoin (BTC-USD). A continued rally in the world’s biggest cryptocurrency finally pushed it earlier in the day to a new record high of $69,208.79, more than two years after the previous milestone set in November 2021. However, it has since dropped 10%.
Turning to the economic calendar, a couple of readings on the services sector pointed to some strength in the economy, something that the Federal Reserve likely won’t be too happy to see. S&P Global and the Institute for Supply Management reported a thirteenth and fourteenth consecutive month of expansion, respectively, in economic activity in the services sector in February. Additionally, January factory orders fell more than expected in January.
Treasury yields were lower on Tuesday. The longer-end 30-year (US30Y) and 10-year yields (US10Y) were both down 8 basis points each to 4.27% and 4.14%, respectively. The shorter-end more rate-sensitive 2-year yield (US2Y) was down 6 basis points to 4.55%.
See live data on how Treasury yields are doing across the curve at the Seeking Alpha bond page.