The Nasdaq and S&P 500 slid on Tuesday driven by tech stocks, as investors gear up for what Federal Reserve chair Jerome Powell will say about the path of interest rates at a key conference later in the week.
The Nasdaq fell as megacaps lost, after having rallied for much of the year. Nvidia fell 3.5 percent, the biggest drop in nearly four months.
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The key event this week is the Fed’s annual symposium at Jackson Hole, Wyoming, from Aug. 21-23, where Powell’s comments will be scrutinized for any clues on the central bank’s outlook on the economy and monetary policy.
“It seems like folks are hedging a little going into Jackson Hole, thinking Powell might be more hawkish than markets currently appreciate,” said James Cox, managing partner at Harris Financial Group.
Interest rate futures point to a total of two rate cuts this year worth 25 basis points each, with the first expected in September, according to data compiled by LSEG.
Some market participants also expressed some concerns about AI-related stocks after OpenAI’s CEO Sam Altman said they are in a bubble in an interview with “The Verge” late last week.
The Dow Jones Industrial Average rose 10.45 points, roughly flat, to 44,922.27, the S&P 500 lost 37.78 points, or 0.59 percent, to 6,411.37 and the Nasdaq Composite lost 314.82 points, or 1.46 percent, to 21,314.95.
Steve Sosnick, chief strategist at Interactive Brokers, said some investors are taking some profits from tech stocks and rotating into other sectors. “(This move) spills into the broader market because of those stocks’ weight in major indices,” he added.
Still, six of the S&P 500 sectors rose. Real estate led the pack, up 1.8 percent, helped by better-than-expected housing data. On the other hand, technology and communications services lost over 1.9 percent and 1.2 percent, respectively.
