Stock Market Falls Sharply as Economic Slowdown Concerns Resurface
On Tuesday, stocks took a significant hit as technology shares faltered and fresh economic data reignited fears about the strength of the U.S. economy.
The Dow Jones Industrial Average dropped 492 points, or 1.2%, while the S&P 500 fell by 1.3%. The tech-heavy Nasdaq Composite saw the largest decline, slipping by 1.8%.
Much of the downward pressure was due to a sharp decline in semiconductor stocks. Nvidia, a leading player in artificial intelligence and a market favourite for over a year, saw its stock plunge by around 6%. Other semiconductor companies like Micron, KLA, and Advanced Micro Devices also experienced losses. The VanEck Semiconductor ETF (SMH) fell by over 4%.
The market’s woes were compounded by disappointing manufacturing data. Two reports released on Tuesday pointed to weakening production, sparking renewed concerns about a slowdown in U.S. economic growth. S&P Global’s report indicated a decline from July to August, while the Institute for Supply Management’s figures fell short of economists’ expectations, as surveyed by Dow Jones.
“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.”
This decline marks the beginning of a new trading month, following a high quality near for the 3 predominant indices in august. The u.S. Markets had been closed on monday in observance of the hard work day holiday.
Despite the gains in August, the outlook for September remains uncertain. Fears of a potential recession in the U.S., along with the unwinding of a popular hedge fund trade involving the Japanese yen, caused stocks to tumble earlier in August. At one point, the S&P 500 was down by more than 7% before recovering.
Investors are now looking ahead to Friday, when the U.S. government will release the August jobs report, the first major economic data of the month. Wall Street is also bracing for potential challenges, as September has historically been the worst month for the S&P 500 over the past decade.