Tech Sector Slump Weighs On Wall Street After Apple Downgrade

(RTTNews) - Stocks moved mostly lower during trading on Tuesday, extending the pullback seen in the final trading session of 2023. The Nasdaq showed a particularly steep drop, reflecting notable weakness among tech stocks.

The Nasdaq plunged 245.41 points or 1.6 percent to 14,765.94, continuing to give back ground after ending last Wednesday's trading at its best closing level in almost two years. The S&P 500 also slid 27.00 points or 0.6 percent to 4,742.83.

Meanwhile, the narrower Dow recovered from initial weakness and bounced back and forth across the unchanged line before closing up 25.50 points or 0.1 percent at 37,715.04.

The weakness in the broader markets came as some traders continued to cash in on recent strength, particularly among technology stocks.

Last year, the Nasdaq skyrocketed by 43.4 percent in 2023, while the S&P 500 soared by 24.2 percent and the Dow surged by 13.7 percent.

A steep drop by shares of Apple (AAPL) also weighed on the tech sector, with the iPhone maker tumbling by 3.6 percent to its lowest closing level in well over a month.

The slump by Apple comes after Barclays downgraded its rating on the company's stock to Underweight from Equal Weight.

Meanwhile, some traders remain away from their desks following the New Year's Day holiday, looking ahead to the release of some key U.S. economic data in the coming days.

Sector News

Semiconductor stocks showed a substantial move to the downside on the day, dragging the Philadelphia Semiconductor Index down by 3.7 percent. The index continued to give back ground after reaching a record closing high last Wednesday.

Considerable weakness was also visible among airline stocks, as reflected by the 2.5 percent plunge by the NYSE Arca Airline Index.

Software and computer hardware stocks also saw notable weakness, contributing to the steep drop by the Nasdaq, while gold stocks also moved lower despite an uptick by the price of the precious metal.

On the other hand, healthcare, pharmaceutical and biotechnology stocks saw notable strength, helping to limit the downside for the broader markets.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance on Tuesday, with the Japanese markets closed following an earthquake on New Year's Day. China's Shanghai Composite Index fell by 0.4 percent, while Australia's S&P/ASX 200 Index rose by 0.5 percent.

The major European markets also finished the day mixed. While the German DAX Index inched up by 0.2 percent, the U.K.'s FTSE 100 Index and the French CAC 40 Index both dipped by 0.2 percent.

In the bond market, treasuries extended the pullback seen over the two previous sessions. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, jumped 8.0 basis points to 3.946 percent.

Looking Ahead

Early trading on Wednesday may be impacted by reaction to separate U.S. reports on manufacturing activity and job openings.

Later in the day, trading may be driven by reaction to the minutes of the Federal Reserve's latest monetary policy meeting, which could impact the outlook for interest rates.