Traders work on the floor of the New York Stock Exchange on June 14, 2024.
Brendan McDiarmid | Reuters
Stocks fell on Thursday as investors continued to trim positions in high-quality technology names while taking profits from recent gains elsewhere.
the Dow Jones Industrial Average It fell by 544 points, or 1.3%. Standard & Poor's 500 It decreased by 0.6%. Nasdaq Composite Lost 0.5%.
Thursday saw more selling of large-cap tech stocks, a pattern seen in recent days as the prospect of a Federal Reserve rate cut in September increased, boosting optimism in the broader market. On the other hand, the enthusiasm was largely helped by small-cap and more cyclical names, which are seen as the biggest beneficiaries of lower borrowing costs.
The shift away from technology culminated on Wednesday, when the Nasdaq fell 2.8% in its worst day since December 2022. Wednesday also marked the first session since 2001 in which the Nasdaq lost more than 2.5%, while the Dow Jones Industrial Average gained.
But Thursday’s sell-off seemed broader than just the tech sector. All but one of the 11 sectors in the S&P 500 fell, while more than two out of three Dow Jones industrials also headed for losses. Even small-cap companies Russell 2000The US consumer price index, which had risen amid expectations of future interest rate cuts, fell about 2%.
“There is some profit taking,” said Keith Buchanan, portfolio manager at Global Investments. “I get a little bit worried if profit taking happens five days into trading, but it shows us the scale of what we’ve seen in terms of turnover.”
Despite Thursday’s declines, the Russell 2000 has jumped 7% in the past five trading days. But the Nasdaq has fallen more than 4% in the same period, underscoring the larger theme of traders exiting the tech sector.
Thanks to Thursday’s moves, the Dow Jones Industrial Average became the only one of the three major indices to post gains over the past week, rising more than 1%. Additionally, the Russell 2000 Index rose 2% over the week.
The S&P 500 is down about 1.2% since the start of the week, while the Nasdaq Composite is down about 3% amid the technology selloff.
“The Fed’s rate easing is clearly going to be good for small caps,” said Charlie Ripley, chief investment strategist at Allianz. Meanwhile, there is “some wisdom and profit-taking in the tech trade that has been so profitable this year.”