Stock market today: Falling tech stocks drag Wall Street lower again

Stock market today: Falling tech stocks drag Wall Street lower again

Updated1 Jun 2024, 12:11 AM IST
Stock market today: Falling tech stocks drag Wall Street lower again
Stock market today: Falling tech stocks drag Wall Street lower again

NEW YORK — Falling technology stocks are once again pulling Wall Street lower on Friday and overshadowing gains made by other, less influential stocks in the market.

The S&P 500 was down 0.4% in afternoon trading, even though the majority of stocks within the index were rising, and remains on track for its first losing week in the last six. The drop for tech stocks dragged the Nasdaq composite down a market-leading 1.1%, as of 2:33 p.m. Eastern time, while the Dow Jones Industrial Average was rising by 190 points, or 0.5%.

Dell tumbled 19.2% even though the tech company matched analysts’ forecasts for profit in the latest quarter. Its stock had already soared 122% in 2024 ahead of the report, meaning expectations were very high, and analysts pointed to concerns about how much profit Dell is squeezing out of each $1 in revenue.

Nvidia was on track for a second straight losing day, down 1.5%, as its momentum finally slows after soaring more than 20% since its blowout profit report last week. The chip company was one of the heaviest weights on the S&P 500 Friday, along with Microsoft's 2% dip and Amazon's 2.4% fall.

Stocks outside of tech were largely steadier after the latest reading on inflation came in roughly as expected. That left open the question of when Wall Street will get the lower interest rates that it craves.

Some relief for stocks came from easing Treasury yields in the bond market, erasing gains made earlier in the week that had hurt the stock market. Yields fell following the release of the report showing a key measure of inflation remained at 2.7% last month, exactly as forecast. Some underlying trends improved by a touch more than expected.

That could bolster the Federal Reserve's confidence that inflation is sustainably heading down toward its target, something it says it needs before it will cut its main interest rate.

The Fed has been keeping the federal funds rate at the highest level in more than 20 years in hopes of slowing the economy enough to stifle high inflation. But if it holds rates too high for too long, it could choke off the economy's growth and lead to a recession that throws workers out of their jobs and craters profits for companies.

“The pickle for the Fed is whether growth will slow faster than inflation,” said Brian Jacobsen, chief economist at Annex Wealth Management. “We’ve gone from great growth to slower growth pretty quickly. The road to lower inflation has been like a joyride so far, but the last mile will be more challenging.”

Friday's report from the U.S. government also showed that growth in spending by consumers weakened last month by more than economists expected. Growth in incomes for Americans likewise slowed.

The numbers show businesses “need to prepare for an environment where consumers are not splurging like they were last year,” according to Jeffrey Roach, chief economist for LPL Financial.

After the report, the yield on the 10-year Treasury fell to 4.51% from 4.55% late Thursday. It had gotten back above 4.60% earlier this week amid worries about tepid demand following some auctions for Treasurys.

The two-year Treasury yield, which more closely tracks expectations for Fed action, slipped to 4.89% from 4.93% late Thursday.

Virtually no one expects the Federal Reserve to cut interest rates at its next meeting in less than two weeks. But traders are betting on an 83% probability that it will cut at least once by the end of the year, according to data from CME Group.

Stocks in industries that tend to benefit the most from easier interest rates led the market Friday. Real-estate stocks in the S&P 500 jumped 1% as a group for one of the biggest gains of all 11 sectors that make up the index. Boston Properties rose 2.8%.

Gap jumped to one of the market’s biggest gains, 25.9%, after delivering stronger profit and revenue for the latest quarter than analysts expected. The parent company of Old Navy and Banana Republic reported growth across its brands, reversing earlier declines at most of them. The retailer also raised its forecasts for sales and profitability this year despite saying the outlook for the economy remains uncertain.

MongoDB lost a quarter of its value despite topping forecasts for profit and revenue. The company, which offers a database for developers, gave forecasts for profit in the current quarter and for this full year that fell short of analysts' expectations.

Trump Media & Technology Group went from an initial gain to a slump of 6.2% in its first trading following the conviction of Donald Trump on 34 felony charges Thursday. The company, which runs the Truth Social platform, had earlier warned in filing with U.S. securities regulators that a conviction of Trump could hurt it.

In stock markets abroad, indexes were mixed across Asian and Europe. Tokyo’s Nikkei 225 rose 1.1%, while Hong Kong’s Hang Seng fell 0.8%.


Business Writers Matt Ott and Elaine Kurtenbach contributed.

This article was generated from an automated news agency feed without modifications to text.

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First Published:1 Jun 2024, 12:11 AM IST
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