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Wall Street ended mostly lower on Wednesday as the rotation out of high-flying megacap tech stocks weighed on the S&P 500 and Nasdaq. Also, the Biden administration said it was planning to implement stricter export restrictions to China. However, the Dow ended in positive territory.
How Did The Benchmarks Perform?
The Dow Jones Industrial Average (DJI) gained 0.6% or 243.60 points, to close at 41,198.08 points, registering its 22nd record closing high this year. The blue-chip index registered its sixth straight day of wins and the largest six-day point gain since Oct 2022.
The S&P 500 slid 1.4% or 78.93 points, to finish at 5,588.27 points. Tech and consumer discretionary were the biggest laggards.
The Technology Select Sector SPDR (XLK) declined 3.9%. The Consumer Discretionary Select Sector SPDR (XLY) lost 1.7%, while the Communication Services Select Sector SPDR (XLC) gave up 1.5%. Six of the 11 sectors of the benchmark index ended in positive territory.
The tech-heavy Nasdaq plummeted 2.8% or 512.42 points to end at 17,996.92 points, recording its biggest single-day percentage decline since Dec 2022.
The fear-gauge CBOE Volatility Index (VIX) was up 9.78% to 14.48. Decliners outnumbered advancers on the NYSE by a 1.39-to-1 ratio. On the Nasdaq, a 1.66-to-1 ratio favored declining issues. A total of 12.47 billion shares were traded on Wednesday, higher than the last 20-session average of 11.74 billion.
Growth Stocks Tumble on Rotation Trade
The rotation trade that started last week has intensified, with momentum stocks, especially technology stocks, taking a hit. Investors have been rotating out of growth stocks and flocking to more rate-sensitive stocks.
This has been weighing on the Nasdaq and S&P 500, with both indexes retreating on Wednesday. Tech stocks, driven by the enthusiasm surrounding artificial intelligence (AI), have largely been responsible for the Wall Street rally that began last year.
The rotation trade comes as investors are more confident about interest rate cuts, which is likely to benefit small caps and companies with higher financial costs. Shares of Meta Platforms, Inc. ((META - Free Report) ) fell 5.7%, while Apple, Inc. ((AAPL - Free Report) ) dropped 2.5%
Also, semiconductor stocks suffered on Wednesday following a report that the Biden administration is planning to impose strict trade restrictions against China. The Philadelphia SE Semiconductor index ended 6.8% down, marking its biggest single-day decline since March 2020.
However, the Dow swam against the tide and finished higher led by a 4.5% jump in shares of UnitedHealth Group ((UNH - Free Report) ). Wednesday was also the first time the 30-stock blue-chip index closed above the 41,000 mark.
Economic Data
In economic data released on Wednesday, the U.S. Census Bureau reported that both housing starts and building starts came in above expectations. Housing starts increased 3% in June to an annual rate of 1.353 million after declining 4.6% in May.
The rebound was driven by a jump in multi-family starts, which offset a decline in single-family starts. Multi-family starts jumped 19.6% to an annual rate of 373,000. However, single-family starts fell 2.2% to an annual rate of 980,000.
Building permits, an indicator of future housing demand, rose 3.4% in June after declining 2.8% in the prior month.
The Federal Reserve said that industrial production 0.6% month over month in June. Manufacturing output rose 0.4%. Year over, year, industrial production rose 1.6% in June. Capacity utilization rose to 78.8% from 78.3% in May.
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Stock Market News for Jul 18, 2024
Wall Street ended mostly lower on Wednesday as the rotation out of high-flying megacap tech stocks weighed on the S&P 500 and Nasdaq. Also, the Biden administration said it was planning to implement stricter export restrictions to China. However, the Dow ended in positive territory.
How Did The Benchmarks Perform?
The Dow Jones Industrial Average (DJI) gained 0.6% or 243.60 points, to close at 41,198.08 points, registering its 22nd record closing high this year. The blue-chip index registered its sixth straight day of wins and the largest six-day point gain since Oct 2022.
The S&P 500 slid 1.4% or 78.93 points, to finish at 5,588.27 points. Tech and consumer discretionary were the biggest laggards.
The Technology Select Sector SPDR (XLK) declined 3.9%. The Consumer Discretionary Select Sector SPDR (XLY) lost 1.7%, while the Communication Services Select Sector SPDR (XLC) gave up 1.5%. Six of the 11 sectors of the benchmark index ended in positive territory.
The tech-heavy Nasdaq plummeted 2.8% or 512.42 points to end at 17,996.92 points, recording its biggest single-day percentage decline since Dec 2022.
The fear-gauge CBOE Volatility Index (VIX) was up 9.78% to 14.48. Decliners outnumbered advancers on the NYSE by a 1.39-to-1 ratio. On the Nasdaq, a 1.66-to-1 ratio favored declining issues. A total of 12.47 billion shares were traded on Wednesday, higher than the last 20-session average of 11.74 billion.
Growth Stocks Tumble on Rotation Trade
The rotation trade that started last week has intensified, with momentum stocks, especially technology stocks, taking a hit. Investors have been rotating out of growth stocks and flocking to more rate-sensitive stocks.
This has been weighing on the Nasdaq and S&P 500, with both indexes retreating on Wednesday. Tech stocks, driven by the enthusiasm surrounding artificial intelligence (AI), have largely been responsible for the Wall Street rally that began last year.
The rotation trade comes as investors are more confident about interest rate cuts, which is likely to benefit small caps and companies with higher financial costs. Shares of Meta Platforms, Inc. ((META - Free Report) ) fell 5.7%, while Apple, Inc. ((AAPL - Free Report) ) dropped 2.5%
Also, semiconductor stocks suffered on Wednesday following a report that the Biden administration is planning to impose strict trade restrictions against China. The Philadelphia SE Semiconductor index ended 6.8% down, marking its biggest single-day decline since March 2020.
The decline was led by AI-darling NVIDIA Corporation ((NVDA - Free Report) ), which ended down 6.6%. NVDA carries a Zacks Rank #1 (Strong Buy). You can see the complete list of today's Zacks #1 Rank stocks here.
However, the Dow swam against the tide and finished higher led by a 4.5% jump in shares of UnitedHealth Group ((UNH - Free Report) ). Wednesday was also the first time the 30-stock blue-chip index closed above the 41,000 mark.
Economic Data
In economic data released on Wednesday, the U.S. Census Bureau reported that both housing starts and building starts came in above expectations. Housing starts increased 3% in June to an annual rate of 1.353 million after declining 4.6% in May.
The rebound was driven by a jump in multi-family starts, which offset a decline in single-family starts. Multi-family starts jumped 19.6% to an annual rate of 373,000. However, single-family starts fell 2.2% to an annual rate of 980,000.
Building permits, an indicator of future housing demand, rose 3.4% in June after declining 2.8% in the prior month.
The Federal Reserve said that industrial production 0.6% month over month in June. Manufacturing output rose 0.4%. Year over, year, industrial production rose 1.6% in June. Capacity utilization rose to 78.8% from 78.3% in May.