Wall Street indexes slumped Thursday; megacap tech, chip stocks, and small-caps faced heavy selling amid renewed U.S. economic slowdown fears.
Fresh data revealed an eight-month low in manufacturing activity, dragging Industrials stocks down 2%, with Caterpillar and Boeing weighing on the Dow.
“The overall market is being influenced by the weak ISM manufacturing report, which tells the market that the economy might actually be in a worse shape than they had expected,” said Robert Pavlik, senior portfolio manager at Dakota Wealth.
“And (Federal Reserve Chair) Powell’s still on hold with rate cuts, so that’s gotten them concerned.”
The small-cap Russell 2000 fell over 3% to a one-week low, despite its largest monthly gain of 2024.
Most megacap stocks fell: Apple and Amazon down over 1% pre-results, Tesla slumped 4%.
Nvidia fell 3.2% amid a chip stocks rout due to Arm’s conservative forecast and Qualcomm’s revenue hit from trade curbs.
At 12:15 p.m., the Dow fell 449.51 points (1.10%), the S&P 500 dropped 45.39 points (0.82%), and Nasdaq lost 222.16 points (1.26%).
However, Meta Platforms surged 6.4% after strong Q2 revenue and an optimistic Q3 forecast, boosting the S&P 500 Communication Services index by 1.3%.
Meta’s quarterly results, unlike Alphabet and Microsoft, excited investors, easing AI spending concerns among the “Magnificent Seven.”
Markets seek signs tech giants can maintain gains, boosting Wall Street to record highs, amid AI excitement and rate cut hopes.
After Fed chief Jerome Powell hinted at policy easing in September, investors are gauging if it ensures a “soft landing” for the economy.
Earlier, data revealed jobless claims hit an 11-month high, indicating labor market weakness before Friday’s Non-farm Payrolls report.
Moderna fell 20% after reducing its 2024 sales forecast for COVID-19 and RSV vaccines by up to 25%.
Eli Lilly gained 3% as trial results revealed Zepbound, a weight-loss drug, lowers hospitalization and death risks for obese adults with heart failure.
Declining issues outpaced advancers 2.13-to-1 on the NYSE and 3.07-to-1 on the Nasdaq.
While the S&P 500 hit 44 new highs and five lows, the Nasdaq Composite saw 59 highs and 113 lows.
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