Mega-cap tech stocks drag Nasdaq down 3% as bear market rally fizzles out
Andrew Kelly/Reuters
- The Nasdaq 100 fell 3% on Tuesday as mega-cap tech stocks resumed their months-long sell-off.
- Tuesday's decline makes it more likely that the recent 6% gain in the S&P 500 was nothing but a bear market rally.
- Stocks were initially higher on Tuesday after China eased its COVID-19 lockdown restrictions.
US stocks resumed their months-long sell-off on Tuesday, with mega-cap tech stocks dragging the Nasdaq 100 down 3%.
The decline makes it more likely that the 6% gain in the S&P 500 over the past week was nothing more than a bear market rally, drawing in hopeful bulls searching for a bottom only to reveal further downside ahead. The decline came on a day when interest rates were rather stable and investors continued to guess if an economic recession is imminent.
New York Fed President John Williams was the latest figure to weigh in on the potential for a recession, telling CNBC that a US recession is not his base case, and that the country could avoid a period of declining economic growth even in the face of higher interest rates.
Here's where US indexes stood at the 4:00 p.m. ET close on Tuesday:
- S&P 500: 3,821.55, down 2.01%
- Dow Jones Industrial Average: 30,946.99, down 1.56% (491.27 points)
- Nasdaq Composite: 11,181.54, down 2.98%
Meanwhile, Ark Invest's Cathie Wood told CNBC on Tuesday that she believes the US is currently in a recession, implying that second-quarter GDP growth will be negative after first-quarter US GDP growth experienced a contraction of more than 1%.
Potentially fueling an economic rebound could be the full reopening of China after months of COVID-19 lockdowns hampered supply chains around the globe.
China said it would cut in half the isolation time required by new arrivals to its country, in a sign that the government is getting serious about driving a rebound in the growth of its economy. Additionally, Shanghai and Beijing both reported no new infections, an encouraging sign that supply chain bottlenecks should continue to ease.
"The COVID crisis appears to be rapidly retreating in China, with no major cities in widespread lockdown and a rapid drop in cases being reported," Susannah Streeter, a market analyst at Hargreaves Lansdown, said.
Robinhood stock fell on Tuesday after Sam Bankman-Fried said FTX is not in active talks to acquire the brokerage firm. Robinhood surged as much as 22% on Monday following a Bloomberg report of a potential merger between the two companies.
Warren Buffett continues to view Occidental Petroleum as an attractive investment, with SEC filings showing that Berkshire Hathaway added another $44 million to its more than $9 billion stake in the oil and gas producer.
West Texas Intermediate crude oil rose as much as much as 1.89% to $111.64 per barrel. Brent crude, oil's international benchmark, jumped as much as 2.37% to $117.82.
Bitcoin fell 2.43% to $20,214. Ether prices fell 2.35% to $1,152.
Gold fell as much as 0.23% to $1,820.60 per ounce. The yield on the 10-year Treasury fell two basis points to 3.20%.
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