On Wednesday, sinking technology stocks caused Wall Street to decline once again, with the S&P 500 experiencing its fourth consecutive loss. The index dropped 29.20 points to 5,022.21, marking its longest losing streak since early January and a 4.4% decrease since reaching a record high at the end of last month. The Dow Jones Industrial Average also slipped 45.66 points to 37,753.31, while the Nasdaq composite fell 181.88 points to 15,683.37.
The decline in tech stocks was triggered by ASML, a Dutch semiconductor industry supplier, reporting weaker-than-expected orders for the beginning of 2024. This news led to a 7.1% decrease in ASML’s stock trading in the United States. Nvidia and Broadcom also saw decreases of 3.9% and 3.5% respectively, making them the heaviest weights on the S&P 500.
Despite some big companies, such as United Airlines, reporting stronger-than-expected profits, the tech sector’s weakness overshadowed these positive results. The losses also occurred despite a decrease in pressure from the bond market, with oil prices falling and easing concerns about inflation, leading to decreased Treasury yields.
The 10-year Treasury yield fell to 4.58% from 4.67%, while the two-year yield dropped to 4.92% from 4.99%. This decrease in bond yields came after traders abandoned hopes for imminent cuts to interest rates by the Federal Reserve, causing yields to return to November levels.
With concerns about inflation persisting, traders are now anticipating only one or two interest rate cuts from the Federal Reserve this year, down from initial forecasts for six or more cuts. As a result, companies will need to demonstrate stronger profits to justify their high stock prices.
Overall, market direction is expected to be influenced by corporate news in the near future, with companies like Travelers and J.B. Hunt Transport Services experiencing declines in their stock prices due to disappointing quarterly results. On the positive side, Omnicom Group reported stronger profits than expected, leading to a 1.6% increase in its stock price.
In international markets, London’s FTSE 100 rose 0.4% following a report of decreased U.K. inflation, potentially paving the way for interest rate cuts. Other European indexes rose modestly, while Asian markets showed mixed results with Japan’s Nikkei 225 falling 1.3% and Shanghai stocks rising 2.1%.
In summary, the stock market experienced declines driven by sinking technology stocks and ongoing concerns about inflation, despite some positive company earnings reports. Market direction will likely be influenced by corporate performance in the coming days.