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Technology Stocks Leading The Way Lower On Wall Street

wallstreet oct24 04may21 lt

With technology stocks leading the way lower, stocks have moved back to the downside in early trading on Tuesday. The tech-heavy Nasdaq has shown a particularly steep drop, while the Dow and the S&P 500 have also slid firmly into negative territory.

Currently, the major averages are off their lows of the session but still stuck in the red. While the Nasdaq is down by 263.25 points or 1.9 percent at 13,631.87, the Dow is down 217.02 points or 0.6 percent at 33,896.21 and the S&P 500 is down 40.35 points or 1 percent at 4,152.31.

The weakness on Wall Street largely reflects a continued pullback by technology stocks, as reflected by the steep drop by the Nasdaq.

The Nasdaq reached a record intraday high during trading last Thursday but has pulled back sharply since then, falling to its lowest intraday level in a month.

Traders may be cashing in on tech stocks that benefited from the coronavirus-induced lockdowns as more states continue to lift restrictions.

Concerns about the near-term outlook for the markets may also be weighing on Wall Street, as some analysts have warned the markets have come too far too fast in light of the ongoing pandemic.

Most major companies have reported better than expected quarterly results this earnings season, but buying interest has been somewhat subdued amid worries about valuations.

In U.S. economic news, a report released by the Commerce Department showed the U.S. trade deficit hit a new record high in the month of March.

The Commerce Department said the trade deficit widened to $74.4 billion in March from a revised $70.5 billion in February.

The trade deficit was nearly in line with estimates, as economists had expected the deficit to widen to $74.5 billion from the $71.1 billion originally reported for the previous month.

A separate report from the Commerce Department showed new orders for U.S. manufactured goods rebounded slightly less than expected in the month of March.

The Commerce Department said factory orders jumped by 1.1 percent in March after falling by a revised 0.5 percent in February.

Economists had expected factory orders to surge up by 1.3 percent compared to the 0.8 percent drop originally reported for the previous month.

Semiconductor stocks are turning in some of the market's worst performances in morning trading, with the Philadelphia Semiconductor Index tumbling by 2.5 percent. The index has fallen to its lowest intraday level in over a month.

Networking, computer hardware and software stocks are also seeing considerable weakness, contributing to the steep drop by the tech-heavy Nasdaq.

Substantial weakness has also emerged among airline stocks, as reflected by the 2.5 percent slump by the NYSE Arca Airline Index.

Most of the other major sectors have also moved to the downside, with notable weakness visible among brokerage, biotechnology and oil service stocks.

In overseas trading, stock markets across the Asia-Pacific region moved mostly higher on Tuesday, with the Japanese and Chinese markets still closed for holidays. Hong Kong's Hang Seng Index advanced by 0.7 percent, while Australia's S&P/ASX 200 Index climbed by 0.6 percent.

Meanwhile, the major European markets have moved to the downside on the day. While the German DAX Index has plunged by 2.2 percent, the French CAC 40 Index is down by 0.7 percent and the U.K.'s FTSE 100 Index is down by 0.2 percent.

In the bond market, treasuries have moved notably higher amid the weakness on Wall Street. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, is down by 4.3 basis points at 1.564 percent.

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