Tech stocks lead another late-day pullback on Wall Street

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The Fearless Girl statue stands in front of the New York Stock Exchange near Wall Street on March 23, 2020 in New York City. (Photo by Angela Weiss / AFP)
The Fearless Girl statue stands in front of the New York Stock Exchange near Wall Street on March 23, 2020 in New York City. (Photo by Angela Weiss / AFP)

dpa-AFX/GNA – After coming under pressure late in the previous session, stocks saw further downside over the course of the trading day on Wednesday.

Technology stocks helped lead the way lower, resulting in a steep drop by the tech-heavy Nasdaq.

The major averages all closed in negative territory, although the Dow edged down just 3.09 points or less than a tenth of a per cent to 32,420.06. The Nasdaq plunged 265.81 points or 2 per cent to 12,961.89 and the S&P 500 slid 21.38 points or 0.6 per cent to 3,889.14.

Lingering concerns about the outlook for high-growth companies contributed to the sell-off by technology stocks, which have seen considerable volatility in recent sessions.

Unlike in previous sessions, however, the weakness in the tech sector came amid a continued pullback by treasury yields.

The yield on the benchmark ten-year note moved lower for the third straight day and has now tumbled by 14 basis points since reaching a fourteen-month intraday high last Thursday. Within the tech sector, shares of Intel (INTC) showed a substantial downturn on the day, slumping by 2.3 per cent after spiking by 6.2 per cent to its best intraday level in over a year in early trading.

The initial jump by Intel came after CEO Pat Gelsinger outlined the company’s path forward to manufacture, design and deliver leadership products and create long-term value for stakeholders.

Gelsinger announced significant manufacturing expansion plans, including building two new factories in Arizona.

He said Intel also plans to become a major provider of foundry capacity in the US and Europe to serve customers globally.

On the US economic front, the Commerce Department released a report showing new orders for US manufactured durable goods unexpectedly decreased in the month of February.

The Commerce Department said durable goods orders slumped by 1.1 per cent in February after spiking by an upwardly revised 3.5 per cent in January.

The pullback came as a surprise to economists, who had expected durable goods orders to climb by 0.8 per cent compared to the 3.4 per cent jump that had been reported for the previous month.

Excluding a steep drop in orders for transportation equipment, durable goods orders still fell by 0.9 percent in February after surging up by 1.6 per cent in January.

Economists had expected a 0.6 per cent increase. The data follows the recent release of disappointing reports on retail sales, industrial production and home sales, although the weakness is largely seen as the result of severe winter storms.

Sector News

Networking stocks moved sharply lower over the course of the session, dragging the NYSE Arca Networking Index down by 2.2 per cent. Substantial weakness also emerged among biotechnology stocks, as reflected by the 2.2 per cent slump by the NYSE Arca Biotechnology Index. The index ended the session at its lowest closing level in well over four months.

Software, computer hardware and semiconductor stocks also came under pressure as the day progressed, contributing to the steep drop by the tech-heavy Nasdaq.

Outside of the tech sector, airline stocks showed a significant downturn over the course of the session, resulting in a 1.9 per cent drop by the NYSE Arca Airline Index.

Telecom and brokerage stocks also showed notable moves to the downside, while energy stocks held on to strong gains amid a rebound by the price of crude oil.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly lower during trading on Wednesday. Japan’s Nikkei 225 Index plunged by 2 per cent, while China’s Shanghai Composite

Index tumbled by 1.3 percent.

Meanwhile, the major European markets turned in a mixed performance the day. While the German DAX Index fell by 0.4 percent, the French CAC 40 Index closed just above the unchanged line and the UK’s FTSE 100 Index inched up by 0.2 per cent.

In the bond market, treasuries extended the upward move seen over the two previous sessions.

As a result, the yield on the benchmark ten-year note, which moves opposite of its price, dipped 2.4 basis points to 1.614 per cent.

Looking Ahead

Trading on Thursday may be impacted by reaction to the Labor Department’s report on initial jobless claims in the week ended March 20.

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