By Chuck Mikolajczak
NEW YORK (Reuters) -The and Nasdaq stumbled on Tuesday, weighed down by weak chip and megacap shares ahead of earnings from heavyweight tech companies this week, but the Dow managed modest gains.
Microsoft (O:), seen by many as leading the artificial intelligence race, fell nearly 2% ahead of its quarterly results due after the closing bell.
Chipmaker Nvidia (NASDAQ:), expected to be a prime beneficiary of the AI growth potential and the year’s second best S&P 500 performer, tumbled more than 6%, weighing on other chip stocks and dragging the Philadelphia semiconductor index down more than 3%.
Other megacap names such as Apple (NASDAQ:) , Amazon.com (NASDAQ:) and Meta Platforms (NASDAQ:) , all due to report earnings this week, also fell on growing concerns that the stocks might be overvalued.
“A lot of people are looking at artificial intelligence now and saying this is all great but I how do I make money on it,” said Stephen Massocca, senior vice president at Wedbush Securities in San Francisco.
“Financially the companies are probably doing quite well, but the question is what are you paying for this? These are not cheap stocks and so you need to go into these things with your eyes open.”
The rose 148.19 points, or 0.37%, to 40,687.35, the S&P 500 lost 29.82 points, or 0.55%, at 5,433.72 and the fell 209.99 points, or 1.21%, to 17,160.21.
Small cap and value stocks such as financials outperformed the broader market to extend a recent rotation out of more expensive stocks as the market has solidified expectations the Federal Reserve will cut rates this year following signs of moderating inflation.
The S&P 500 financials index jumped 1.3% to lead gains among the 11 major S&P sectors while technology, down 1.7%, was the worst performer.
Megacap stocks fell on Tesla (NASDAQ:)’s disappointing results after Alphabet (NASDAQ:)’s higher expenditure forecast induced last week’s broad-based market sell-off.
The market is betting on a slight chance that the Fed will cut rates by at least 25 basis points at the end of its policymaking meeting on Wednesday, but it is completely pricing in a cut for the U.S. central bank’s September meeting, CME’s FedWatch Tool showed.
Several labor data releases this week will culminate in Friday’s government payrolls report. On Tuesday, a Job Openings and Labor Turnover Survey pointed to 8.18 million job openings in June, compared to economists’ expectation of 8 million.
Among single stocks, Procter & Gamble (NYSE:) tumbled almost 6% after missing fourth-quarter sales expectations.
Merck plunged more than 9% after the drugmaker cut its annual profit forecast. CrowdStrike (NASDAQ:) dropped nearly 11% after a report that Delta Air Lines (NYSE:) sought compensation from the cybersecurity firm and Microsoft for the global cyber outage earlier this month.
Cybersecurity and cloud services company F5 surged nearly 14% after forecasting fourth-quarter results above estimates.
Advancing issues outnumbered decliners by a 1.2-to-1 ratio on the NYSE, and by 1.35-to-1 on the Nasdaq.
The S&P 500 posted 65 new 52-week highs and one new low, while the Nasdaq Composite recorded 114 new highs and 113 new lows.
Read the full article here
