Wall Street Pulls Back from Record Highs as Tech Stocks Stumble
In a shaky day of trading, Wall Street took a step back from its record-setting rally on Friday, putting a temporary halt to the huge gains seen since Halloween. The S&P 500 fell 0.7% from its all-time high, with the Nasdaq composite leading the losses with a 1.2% drop. The Dow Jones Industrial Average, which has less exposure to tech stocks, held up better with a 0.2% decline.
The mixed data on the U.S. job market initially boosted hopes for easier interest rates later this year, but the market sentiment turned negative after Nvidia, one of the most influential stocks, experienced a rare stumble following a significant surge. Critics had called the surge in Nvidia’s stock price overdone.
The bond market also reacted to the mixed job market data, with Treasury yields easing. Economists described the job market as “all over the place,” with employers hiring more workers than expected but wages rising less than forecasted. The report also revised down job growth numbers from January.
The delicate balance in the job market and overall economy has Wall Street hoping for continued growth without raising inflation pressures. The ultimate goal is to cool inflation enough to convince the Federal Reserve to lower interest rates from their highest level since 2001.
Traders are betting on June as the likeliest starting point for the Fed’s rate cuts, with the hope that lower interest rates will encourage borrowing and strengthen the economy. Fed Chair Jerome Powell indicated that the central bank is close to cutting rates, pending confirmation that inflation is heading sustainably down to the 2% target.
Despite the overall market pullback, some companies reported stronger-than-expected profits, including Gap and Smith & Wesson Brands. However, tech giant Nvidia saw a significant decline, dragging down the overall market. Other companies like Broadcom and Costco also experienced losses, contributing to the overall negative sentiment on Wall Street.
In international markets, indexes were mixed in Europe and rose modestly in Asia, with South Korea’s Kospi standing out with a 1.2% jump. The day’s trading ended with the S&P 500 down 33.67 points, the Dow dropping 68.66 points, and the Nasdaq sliding 188.26 points.
Overall, the market’s reaction to the job market data and tech stock performance highlights the delicate balance between economic growth and inflation pressures, with Wall Street closely watching for signals from the Federal Reserve regarding future interest rate cuts.
