U.S. stocks fell on Tuesday, moving further away from their record highs, as uncertainty over interest rate cuts and a shakeup in “Magnificent 7” stocks put the market in a cautious mood.
Contracts on the tech-heavy Nasdaq Composite (^IXIC) led the declines, falling about 1.8%, as declines in Apple (AAPL) and Tesla (TSLA) continued to weigh on stocks overall.
Apple came under pressure after it reported that iPhone sales in China fell 24%, compounding Monday's loss as a result of a $2 billion EU antitrust fine. Tesla continued to slump as the closure of its Berlin Gigafactory heightened concerns about a drop in deliveries and a price war in China.
The S&P 500 (^GSPC) fell about 1%, while the Dow Jones Industrial Average (^DJI) fell about 0.8% after a losing start to the week.
Despite the overall market decline, Bitcoin (BTC-USD) hit a new all-time high, briefly surpassing its previous record of $68,789 set in November 2021. It has since declined and sits at around $65,000 per coin.
The debate now is whether tech gains have peaked behind the recent record-breaking stock rally, as bad news erodes the “FOMO” – the fear of missing out – seen as a stimulus to motivate investors.
At the same time, belief in the Federal Reserve's impending monetary easing took a hit following comments from policymaker Raphael Bostic. The Atlanta Fed president said he expects only one rate cut this year, scheduled for the third quarter.
Investors are now even more focused on Fed Chairman Jerome Powell's testimony to Congress on Wednesday. His words will be watched closely to see if the mantra that policymakers must be confident that inflation has been overcome before every move changes.
In corporate bonds, Target's (TGT) earnings beat Wall Street forecasts and helped shares rise more than 10% in afternoon trading.
Tue, March 5, 2024 at 6:58 p.m. GMTIt's a bad day for the so-called “Magnificent 7” tech stocks.
Apple (AAPL), Alphabet (GOOGL, GOOG), Microsoft (MSFT), Amazon (AMZN), Meta (META), Tesla (TSLA) and Nvidia (NVDA) are all in the red on Tuesday.
But as we highlighted about a month ago, history tells us that even if the Magnificent 7 loses momentum, stocks can still rise this year.
Research by BMO Capital Markets chief investment strategist Brian Belski on Feb. 6 showed that even when the top stocks that make up a large portion of market action decline, the index's returns historically rise over the next year were quite good.
A graphic from Belski shows that since 1992 On average, the S&P 500 is up 14.3% for the year after the top 10 stocks' contribution peaked at the benchmark average. The only time the S&P 500 posted a negative return over the next year was in 2001, when the tech bubble subsided.
“While some investors worry that the market will likely struggle if these stocks don't lead, our analysis shows that the S&P 500 has performed well following peaks in the relative performance of the 10 largest stocks,” Belski wrote in one Note to customers on Tuesday.
- Tue, March 5, 2024 at 6:08 p.m. GMT
Trend ticker: SoFi, Target, Meta
Here are some of the stocks topping Yahoo Finance's Trend Ticker page in afternoon trading on Tuesday:
SoFi Technologies (SOFI): The stock plunged about 13% after the company announced a new bond offering. SoFi said it plans to offer $750 million of convertible senior notes due 2029. A portion of the proceeds will cover the costs of completing cap call transactions designed to “reduce the potential dilution of SoFi’s common stock upon conversion.” issue bonds and/or offset any cash payments.”
target company (TGT): Shares rose about 13% after the retail giant reported an increase in both revenue and profit. The company has touted its “roadmap for growth,” which includes establishing Target as a growth company “from a comparable sales standpoint, from a traffic standpoint, and from a [market] Share point of view.”
metaplatforms (META): Shares fell just over 1% after the company experienced a wave of outages on its social media platforms, including Facebook, Instagram and Threads.
mass strike (CRWD): Shares fell about 7% ahead of the company's quarterly earnings, due after the bell on Tuesday. Ahead of the results, Crowdstrike announced an expansion of its partnership with Dell Technologies to help customers “defend against increasingly complex cyberattacks.”
- Tue, March 5, 2024 at 5:05 p.m. GMT
Nasdaq leads to broader market declines
Market losses escalated through early afternoon trading, with the Nasdaq Composite (^IXIC) leading the broader declines. The tech-heavy index fell about 1.8% as declines in Apple (AAPL) and Tesla (TSLA) continued to weigh on stocks overall.
Apple shares fell about 3% after reports that iPhone sales in China fell 24%. Tesla shares fell 4.5% as the closure of its Berlin Gigafactory added to concerns about a drop in deliveries and a price war in China.
The S&P 500 (^GSPC) fell about 1%, while the Dow Jones Industrial Average (^DJI) moved about 0.8%.
- Tue, March 5, 2024 at 4:45 p.m. GMT
Gold hits new highs on expectations of interest rate cuts and geopolitical tensions
Gold prices rose to new highs on Tuesday on expectations that the Federal Reserve will cut interest rates and geopolitical tensions continue.
Gold futures (GC=F) hit a high of $2,150.50 earlier on Tuesday after April contracts closed at a record $2,126.30 an ounce in the previous session. On Tuesday, spot gold hit a record $2,141.79 before retreating again.
The precious metal is considered a safe haven during times of uncertainty and typically rises when the US dollar falls and interest rates fall.
Investors expect the Federal Reserve to begin cutting interest rates later this year.
Gold has held above $2,000 in recent months despite a longer-term higher interest rate environment. Central banks have been buying gold for their reserves at historic levels, stimulating demand.
Adjusted for inflation, gold reached a record high of $850 per ounce in 1980, which would be almost $3,200 in today's dollars.
- Tue, March 5, 2024 at 4:01 p.m. GMT
Bitcoin reaches new record high
Bitcoin (BTC-USD) hit a new all-time high of $68,991, briefly surpassing its previous record of $68,789 set in November 2021. It has since declined and is at around $67,000 per coin.
The price increase is due to US regulators’ approval of spot Bitcoin ETFs, which were launched in January. According to Bloomberg, the ETFs generated more than $4.2 billion in net new inflows in just one month.
The prices of other cryptocurrencies such as Ethereum (ETH-USD) also experienced a boost in the wake of Bitcoin's rise. Ether prices are up 66% year-to-date and are at around $3,800 per coin.
- Tue, March 5, 2024 at 3:15 p.m. GMT
The Macro Setup and Election Season
It's a day full of Super Tuesday analysis from various market experts and other experts.
So why not join in the fun here at Yahoo Finance?
Good news just landed in my inbox from one of my favorite economists, Michael Schumacher of Wells Fargo. I found it helpful to see him thinking about potential market moves months before the election, with a particular focus on fiscal and monetary policy.
Schumacher's thoughts:
Republican election victory
“In our view, a Republican victory is the scenario that would result in the largest increase in the Treasury’s deficit and funding needs after 2025. We expect looser fiscal policy under a Trump administration, particularly if Republicans gain control of Congress. President Trump would most likely do this.” He would like to extend, if not expand, his previous tax cuts. We expect this scenario to have the largest impact on the Treasury term premium and yield curve (e.g. 5/30). As noted, if Trump wins big in the next few weeks, the curve will likely steepen and a Republican victory will become increasingly likely.”
Democratic momentum
“This scenario also appears to involve a larger deficit and a steeper Treasury curve, although to a lesser extent than if the Republicans win.” Our economists say: “Even if Democrats win on Election Day, we doubt they will concede would mean that the TCJA expires completely.” It is conceivable that the tax rates for top earners will rise even more. In addition, corporate tax increases are also more likely in this scenario. Although some of the individual income tax provisions are likely to expire as planned, we expect more sensible spending packages to accompany the expiration of the tax cuts.”
- Tue, March 5, 2024 at 2:32 p.m. GMT
Stocks continue to fall from their record highs
US stocks fell on Tuesday, falling again from their record highs.
At the opening bell, the S&P 500 (^GSPC) slipped 0.4%, while the Dow Jones Industrial Average (^DJI) fell about 0.3% after a losing start to the week. Contracts on the tech-heavy Nasdaq Composite (^IXIC) fell about 0.8% as Apple (AAPL) and Tesla (TSLA) continued to decline.
- Tue March 5, 2024 at 12:30 GMT
It's Super Tuesday, the CEO of Target mentions the word election
Super Tuesday is unlikely to move markets.
Totally get it, plus there's a lot more happening in the markets this week, from wild moves in Bitcoin to the drop in Tesla (TSLA) stock.
But at some point this year, the upcoming contentious presidential election in the US will move markets. That's why I'm expecting comments from leaders on the election today to help investors navigate the murky waters over the next few months.
Target (TGT) Chairman and CEO Brian Cornell, who I last saw in person at the White House a few months ago before a meeting with the Biden administration, didn't tell me much about his macroeconomic views on Super Tuesday. However, in a phone conversation, he gave me just enough information to start thinking about how consumer stock trading might evolve in the months leading up to November.
This is what he told me:
“We looked [the election] like you are, really careful. We looked at past trends during election years. I think that we can bring a little joy to our guests in uncertain times. Make sure we make Target a special place for them to shop, filled with relevant products and great value. But we know they will continue to use and we want to be a target during what can be a very challenging and uncertain time.”
Tue, March 5, 2024 at 6:58 p.m. GMT
Tue, March 5, 2024 at 6:08 p.m. GMT
Tue, March 5, 2024 at 4:45 p.m. GMT
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Tue, March 5, 2024 at 3:15 p.m. GMT
Tue, March 5, 2024 at 2:32 p.m. GMT