US stocks tumble as tech struggles and disappointing data raises fresh fears about economic growth
Stocks plunged on Tuesday as the technology sector struggled and fresh economic data reignited concerns about the US economy, as per CNBC.
The Dow Jones Industrial Average fell by 626.15 points, a drop of 1.51 percent, closing at 40,936.93. The S&P 500 decreased by 2.12 percent, finishing at 5,528.93, while the Nasdaq Composite saw the steepest decline, dropping 3.26 percent to end at 17,136.30.
All three major indexes marked their worst performance since the global sell-off on August 5.
The semiconductor industry played a key role in the market’s decline. Nvidia, a prominent player in the sector, fell by over 9 percent. Other companies like Micron, KLA, and Advanced Micro Devices also saw significant drops during the trading session.
As a whole, the Vaneck Semiconductor ETF (SMH) dropped by more than 7 percent. The technology sector within the S&P 500 led the index’s decline, experiencing its worst single-day performance since September 2022.
The market downturn was triggered by weak manufacturing production data.
Two key reports indicated economic weakness: S&P Global reported a decline in production from July to August, and the Institute for Supply Management’s index fell short of economists’ expectations from a Dow Jones survey.
These disappointing reports raised concerns about the slowing growth of the US economy, contributing to Tuesday’s sell-off. Similar concerns led to a significant market decline in early August.
“The market right now seems to be very jumpy to any data that comes in,” said Larry Tentarelli, chief technical strategist at the Blue Chip Trend Report. “We’ve become a very data-dependent market.”
The downturn marked the start of a new trading month, as the US markets had been closed on Monday for the Labour Day holiday. Despite the declines on Tuesday, all three major indexes ended August with gains.
However, this momentum was not expected earlier in the month, when concerns about a potential US recession and the unwinding of a hedge fund trade involving the Japanese yen sent stocks tumbling.
At one point, the S&P 500 dropped more than 7 percent before it managed to recover by the end of August.
Investors are now looking ahead to Friday, when the US government is set to release the August jobs report. This will be the first major economic data release of the month.
Wall Street also faces historical headwinds, as September has consistently been the worst-performing month for the S&P 500 over the past decade.
