Benchmarks closed in the negative territory on Tuesday as technology stocks declined for the third consecutive session. The Nasdaq witnessed its quickest decline ever and fell into correction territory.
The Dow Jones Industrial Average (DJI) slid 632.42 points, or 2.3%, to close at 27,500.89 and the S&P 500 fell 95.12 points, or 2.8% to close at 3,331.84. The Nasdaq Composite Index closed at 10,847.69, shedding 465.44 points, or 4.1%. The fear-gauge CBOE Volatility Index (VIX) increased 2.3%, to close at 31.46. Declining issues outnumbered advancing ones for 3.78-to-1 ratio on the NYSE and a 2.22-to-1 ratio on the Nasdaq favored decliners.
How Did the Benchmarks Perform?
On Tuesday, all the 11 major sectors of the S&P 500 closed in the red, with the technology sector lagging the most by 4.6%. The communication services, financials and energy sectors closed 2.4% lower for the session. The broader index has declined nearly 7% over the past three days and has witnessed its worst three-day stretch since June.
Massive decline in tech stocks put the Nasdaq in correction territory on Sept 8. Tuesday’s sell-off had placed the tech-laden Nasdaq down nearly 10% over the past three days and also marks the benchmark’s worst three-day stretch since August. In fact, it is the quickest correction on record for the Nasdaq, per a Dow Jones Market Data.
Overall, the S&P 500 posted no new 52-week highs and two new lows, while the Nasdaq Composite recorded 31 new highs and 49 new lows.
Tech Meltdown & US-China Showdown
The slump among major benchmarks continued on Tuesday with steep decline in technology companies. Nasdaq’s heavyweight, Tesla, Inc. (TSLA - Free Report) declined 21.1% yesterday, its worst one-day decline on record after the S&P Dow Jones Indices shattered investor’s hopes by not adding the giant to the index. The S&P 500 Index Committee added Etsy, Inc. ETSY, Teradyne, Inc. (TER - Free Report) and Catalent, Inc. CTLT to the index, after the closing bell on Friday.
Tesla carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Decline in shares of Apple Inc. (AAPL - Free Report) and Microsoft Corporation (MSFT - Free Report) by 6.7% and 5.4%, respectively, weighed on the indexes along with more than 3.6% decline in Facebook, Inc. (FB - Free Report) , Amazon.com, Inc. (AMZN - Free Report) and Alphabet Inc. GOOGL. Overall, the S&P 500 technology sector dropped 4.6% and closed the session more than 11% below its all-time high set on Sept 2.
Additionally, concerns over a potential U.S.-China tiff impacted semiconductor stocks. On Sep 8, the United States launched a global data security initiative, an attempt to counter U.S. efforts to isolate their networks from Chinese technology. China in return accused the United States of “bullying”. Probabilities of a U.S. sanction against SMIC, China’s biggest chipmaker effected domestic suppliers and pushed PHLX semiconductor index 3.4% lower on Tuesday.
Shares of Applied Materials, Inc. (AMAT - Free Report) , NVIDIA Corporation (NVDA - Free Report) , Advanced Micro Devices, Inc. (AMD - Free Report) and Micron Technology, Inc. (MU - Free Report) fell 8.7%, 5.6%, 4.1% and 3.1%, respectively on Tuesday.
Stocks that Made Headline
General Motors (GM - Free Report) and Nikola Corporation NKLA are set to enter into a strategic alliance. Per the partnership, General Motors will aid Nikola in engineering and manufacturing its Badger, a fully-electric and hydrogen fuel-cell electric pick-up truck. (Read More)
Hess Corporation (HES - Free Report) announced another offshore Guyana oil finding, marking the 18th discovery in the Stabroek block. (Read More)
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