Stock Market Today: Wall Street Slumps to Worst Day in Weeks; Bitcoin Touches Record Before Tumbling

NEW YORK (AP) — The drop in Big Tech stocks dragged Wall Street to its worst day in three weeks on Tuesday.

The S&P 500 fell 1% for the second straight loss after closing last week at an all-time high. The Dow Jones Industrial Average fell 404 points, or 1%, and the Nasdaq Composite led the market decline with a 1.7% drop.

Apple's 2.8% drop was one of the biggest weights on the market. It has been struggling over concerns about weak iPhone sales in China, where stiff competition and a shaky general economy They are challenging him.

Apple is one of several Big Tech stocks that have recently taken a hit under the weight of much higher expectations after being priced much higher. Since early last year, a select group known as the “Magnificent Seven” has been responsible for the vast majority of the S&P 500's rise to all-time highs.

The declines in several of them were among the biggest drags on the S&P 500 on Tuesday. Microsoft fell 3%, Amazon fell 1.9% and tesla fell 3.9%.

Accumulating technology stocks has become one of the most popular moves on Wall Street among both mutual funds and hedge funds, according to strategists at Barclays Capital. That can increase the risk of sharp declines later when momentum breaks, particularly as criticism mounts that prices have become too expensive.

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High-growth stocks in general have been rising for a variety of reasons, including a frenzy around AI technology, but if they "fail to live up to aggressive expectations, growth investors will likely end up disappointed," according to the allocation team. of GMO assets. the investment firm co-founded by Jeremy Grantham.

MicroStrategy fell 21.2% after saying it will raise $600 million in debt, which it will use to buy more bitcoin and for "general corporate purposes."

Bitcoin briefly rose above $69,000 on Tuesday, surpassing its record set in 2021, before retreating below $63,000. It has risen in part due to new exchange-traded funds that offer investors easier access to the cryptocurrency. It has roughly tripled in the past 12 months, but is known for large swings in both directions that can occur painfully and suddenly.

Aim helped limit the market's losses after rising 12%. It reported a bigger rise in profits by the end of 2023 than analysts expected as it kept the lid on some expenses.

New York Community Bancorp also rose 17.9% to trim its loss for the week so far to 9.3%. The bank is under pressure due to losses related to investments it has made in the commercial real estate sector. It is also under increased regulatory scrutiny due to its purchase of much of Signature Bank, one of the banks that fell in last year's mini-crisis for the industry.

Several analysts still say NYCB's problems are likely one-offs, rather than a sign of trouble ahead for banks in general, particularly after the U.S. government's efforts last year to boost the industry. But if interest rates remain high, it could put more pressure on the entire industry.

In total, the S&P 500 fell 52.30 points to 5,078.65. The Dow Jones fell 404.64 to 38,585.19 and the Nasdaq sank 267.92 to 15,939.59.

Hopes for upcoming interest rate cuts got a boost after a report showed growth in the U.S. construction, health care and other services industries slowed last month more than economists expected. .

Perhaps most importantly for the market, the report also said prices paid by utilities rose at a slower pace in February than in January. Meanwhile, a separate report said orders to U.S. factories weakened more than expected in January.

Wall Street's hope has been that the economy will continue to advance, but not at a pace strong enough to maintain upward pressure on inflation. That's because traders want the Federal Reserve to cut interest rates this year, something it is tipped to do only if inflation cools decisively toward its 2% target.

Following Tuesday's reports, bets increased among traders that the Federal Reserve will begin cutting interest rates in June. The Federal Reserve's main rate is at its highest level since 2001 in hopes of reducing inflation. Any cuts would ease pressure on the economy and financial system.

Federal Reserve Chair Jerome Powell will testify before Congress later this week, which could further influence expectations for when rate cuts could begin.

In the bond market, the 10-year Treasury yield fell to 4.13% from 4.22% late Monday.

On overseas stock markets, Hong Kong's Hang Seng Index fell 2.6%. China's premier said the country's economic goal growth this year is around 5%, in line with expectations. But the government's intention to keep its deficit at 3% of the size of the overall Chinese economy may have disappointed investors hoping for more aggressive action.

Shares in Shanghai rose 0.3%, while indexes fell modestly in much of the rest of the world.

AP Business writers Elaine Kurtenbach and Matt Ott contributed.

Copyright 2024 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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