Market News
Wall Street closed lower on Monday, dragged down by technology stocks and a significant drop in U.S. oil prices. The Dow and S&P 500 experienced their biggest losses since September 2022, and the Nasdaq also closed lower amid worries about an economic downturn.
How Did The Benchmarks Perform?
The Dow Jones Industrial Average (DJI) fell 2.6% or 1,033.99 points to close at 38,703.27. All components of the 30-stock index ended in negative territory. This decline marks the Dow and the S&P 500's largest single-day losses since September 2022.
The S&P 500 tumbled 160.23 points, or 3%, to close at 5,186.33. All 11 broad sectors of the benchmark index closed in the red. The Technology Select Sector SPDR (XLK), the Communication Services Select Sector SPDR (XLC), and the Real Estate Select Sector SPDR (XLRE) fell 3.3%, 2.9% and 2.9%, respectively.
The tech-heavy Nasdaq Composite declined 576.08 points, or 3.4%, to close at 16,200.08
The fear-gauge CBOE Volatility Index (VIX) was up 64.90% to 38.57. A total of 16.50 billion shares were traded on Monday, higher than the last 20-session average of 12.29 billion. The S&P 500 posted 16 new 52-week highs and 26 new lows; the Nasdaq Composite recorded 14 new highs and 508 new lows.
“Magnificent Seven” Faces Sharp Decline
On Monday, major technology stocks, including Alphabet Inc. GOOG, Amazon.com, Inc. AMZN, Apple Inc. AAPL, Meta Platforms, Inc. META, Microsoft Corporation MSFT, NVIDIA Corporation NVDA, and Tesla, Inc. TSLA, experienced significant declines, collectively losing over $600 billion in market capitalization.
This decline came after a sell-off that started last week due to disappointing U.S. economic data and concerns about a possible recession.
Geopolitical tensions, especially impacting chip companies like NVIDIA, also played a part in this downturn as its shares fell by 6.4% despite performing this year.
The challenges faced by the tech industry were worsened by issues, including a recent federal ruling against Google for monopolizing search on Android and iPhone devices. Moreover, a significant decrease in Japan's Nikkei 225 index affected U.S. markets, resulting in a 3.3% downturn in the information technology sector.
Consequently, shares of Amazon.com, Inc. AMZN fell 4.1%. Amazon carries a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
U.S. Crude Oil Prices Hit Six-Month Lows
U.S. oil prices took a drop on Monday, hitting their point in six months due to concerns about a possible economic downturn. The September contract for West Texas Intermediate (WTI) closed at $72.94 per barrel, down 0.79%, marking its lowest settlement since Feb 5. The Brent October contract also saw a decline of 0.66%, settling at $76.30 per barrel.
WTI prices have nearly wiped out their gains for the year with an increase of 1.8%, while Brent has turned slightly negative for 2024. The decrease in oil prices is indicative of uncertainties and market worries.
OPEC+ had initially planned to boost oil production from October. These plans may now be up for reassessment. “Don't see OPEC increasing output into this market,” says RBC's Helima Croft — head of a global commodity strategy at RBC Capital Markets.
Economic Data
The Institute for Supply Management reported that economic activity in the services sector expanded for the 47th time in 50 months, coming in at 51.4 for July. The number was 48.8 in June.
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Alphabet Inc. (GOOG) : Free Stock Analysis Report
Amazon.com, Inc. (AMZN) : Free Stock Analysis Report
Apple Inc. (AAPL) : Free Stock Analysis Report
Microsoft Corporation (MSFT) : Free Stock Analysis Report
NVIDIA Corporation (NVDA) : Free Stock Analysis Report
Tesla, Inc. (TSLA) : Free Stock Analysis Report
Meta Platforms, Inc. (META) : Free Stock Analysis Report
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