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THE BIZNOB – Global Business & Financial News – A Business Journal – Focus On Business Leaders, Technology – Enterpeneurship – Finance – Economy – Politics & LifestyleTHE BIZNOB – Global Business & Financial News – A Business Journal – Focus On Business Leaders, Technology – Enterpeneurship – Finance – Economy – Politics & Lifestyle

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Market Correction: Nasdaq’s Tech Decline Pulls Wall Street Lower with Megacaps and Chips

Nasdaq's Tech Decline Pulls Wall Street Lower with Megacaps
Nasdaq's Tech Decline Pulls Wall Street Lower with Megacaps

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Nasdaq’s Tech Decline Pulls Wall Street Lower with Megacaps 

On March 5, Wall Street indexes closed lower, with particular weakness observed in megacap growth companies like Apple Inc. and the chip sector, impacting the Nasdaq ahead of anticipated economic data and remarks from Federal Reserve Chair Jerome Powell later in the week. Economic data released on Tuesday offered a mixed outlook, indicating slower growth in the U.S. services industry in February with declining employment but also revealing a measure of new orders at a six-month high, signifying underlying strength in the sector.

Despite 525 basis points worth of interest rate hikes from the Fed since March 2022, the Purchasing Managers Index confirmed ongoing economic growth. However, another survey showed a more substantial-than-expected drop in new orders for U.S.-manufactured goods in January.

Some analysts attributed the sell-off in the technology sector on Tuesday to profit-taking, considering the sector’s recent rally with a 56% increase in 2023. Kevin Gordon, senior investment strategist at Charles Schwab, suggested that investors might be securing profits in high-performing areas, especially given the apprehension before Powell’s remarks and the release of significant labor market data.

Two reports contributed to a risk-off sentiment. Firstly, Apple shares faced pressure following a research report indicating a 24% year-on-year decline in iPhone sales in China for the first six weeks of 2024. This decline was attributed to increased competition from domestic rivals like Huawei. Additionally, the chip sector experienced a setback after a Bloomberg News report highlighted that Advanced Micro Devices encountered obstacles in selling an AI chip designed for the Chinese market due to tightened restrictions on advanced technology exports to Beijing. This development led chip rivals to underperform the broader market, as indicated by the Philadelphia Semiconductor Index.

The day’s events reflected the nuanced economic conditions and market sentiments, with investors closely monitoring data releases and awaiting guidance from critical figures like Jerome Powell.


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