Nasdaq falls for second day as tech struggles to rebound
- Amazon and Apple helped push the Nasdaq lower.
- Apple declined nearly 2 percent at its lows after analysts at Goldman Sachs predicted lower iPhone sales in March and for the June quarter than the rest of the Street.
- Amazon fell as much as 7.4 percent after Axios reported that President Donald Trump was “obsessed” with the company.
- “Big Tech is no longer a sleek, elegant black box; it is a jumble of wires that requires the constant intervention of an increasing number of humans to keep it on the rails,” says Nicholas Colas of DataTrek Research.
U.S. stocks alternated between gains and losses on Wednesday as tech struggled to bounce back from steep losses seen in the previous session.
The Nasdaq composite pulled back 0.7 percent, after briefly trading higher, as Apple slipped 0.8 percent and Amazon dropped 4.5 percent. The S&P 500 fell 0.1 percent, with technology declining 0.5 percent. It traded higher earlier on Wednesday.
The Dow Jones industrial average traded 27 points higher after falling more than 100 points. The 30-stock index also rose more than 200 points earlier in the session.
Amazon fell as much as 7.4 percent after Axios reported that President Donald Trump was “obsessed” with the company. The report also said Trump wants to “go after” Amazon. Amazon’s stock traded 3 percent lower in afternoon trade.
Apple declined nearly 2 percent at its lows after Goldman Sachs analysts predicted lower iPhone sales in March and for the June quarter than the rest of the Street. They also cut their price target on the stock to $159 from $161.
The Technology Select Sector SPDR fund (XLK) briefly entered into correction territory on Wednesday.
“Tech is driving the news today,” said Adam Sarhan, CEO of 50 Park Investments. “What you’re seeing is a rotation out of tech and into some of the more fairly and under-valued areas of the market.”
Tech fell 3.5 percent on Tuesday, marking its biggest one-day decline since Feb. 8. The move lower in tech sent ripples through the entire stock market as the major averages fell more than 1 percent. The drop in the sector took place after Reuters reported Nvidia is temporarily suspending self-driving tests.
The selling was exacerbated by further pressure on Facebook shares. Reports emerged last week alleging that Cambridge Analytica, an analytics company, had gathered data from 50 million Facebook profiles without users’ permission. CNN reported Tuesday that Facebook CEO Mark Zuckerberg will testify in front of Congress on the Cambridge Analytica leak.
“Big Tech is no longer a sleek, elegant black box; it is a jumble of wires that requires the constant intervention of an increasing number of humans to keep it on the rails,” Nicholas Colas, co-founder of DataTrek Research, said in a note. “In short, the bloom is off the tech rose.”
Investors also flocked to traditionally safer assets like bonds, pushing the 10-year Treasury yield below 2.8 percent. On Wednesday, the yield hit its lowest level in seven weeks.
Meantime, investors around the world have been keeping a close eye on global trade issues, debating what economic implications there could be if a trade war occurred between China and the U.S. This comes after Trump signed an executive memorandum that would inflict tariffs on Chinese imports — of up to $60 billion, prompting the Asian nation to retaliate.
In economic news, the U.S. economy grew by 2.9 percent in the fourth quarter, according to the final read on the U.S. economy for the period.