The Wall slips on the last day of trading of the week, with Nasdaq and S&P leading the fall of the U.S. equities market after touching record highs during the session.
With high-flying blue chip stocks going into the reverse gear, along with the release of the labor market report showing an unexpected increase in new jobs generation, with a rising unemployment rate.
Both the S&P 500 and Nasdaq reached their individual intraday highs initially in the day, but then started to lose steam by the afternoon. Similarly, the Philadelphia semiconductor index (.SOX) performed poorly and ended the day down and out by 4% after touching an intraday high earlier in the session.
Artificial Intelligence chip producer, Nvidia (NVDA.O) also fell by 5.6% to end its six-session winning streak. Early in the morning it had hit an upbeat of more than 5%. In the semiconductor index, Broadcom (AVGO.O) dipped 7% after its full-year earnings forecast failed to excite investors. While Marvell technology fell down by a massive 11.4% after it forecasted a much lower than expected first quarter revenue.
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The Labor Market
Initially the stocks had opened higher after the labor market report showed that the U.S job market has performed really well and added jobs in February. However, the signs of increased unemployment rate from 3.7% to 3.9% and a decrease in wage growth by 0.1% resulted in Wall Street slips on the ground, with Nasdaq leading the fall.
Brian Price, head of investment management for Commonwealth Financial Network, described the situation as “Today is just profit taking,” he described the week as “a microcosm of the year so far with modest pull backs and buyers stepping in.”
The day also pointed out at the cautious nature of consumers, with Costco Wholesale (COST.O) shares going down by 7.6% as quarterly sales fell shy of the estimates due to a slow demand.
But Price said “the general bias right now is for the market to continue moving higher, in the absence of negative catalysts. That’s really what the market is hanging its hat on right now, that inflation is going to continue to go down, and the Fed is going to start to ease.”
However, the consumer price index and retail sales data that will be released next week, will offer much more clarity in this matter. Moreover, Fed Chair Jerome Powell also hinted that the Central Bank is not far from reducing the interest rates.
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The Stock Markets
As the day started to subside, all the gains made earlier in the session were washed up and Wall Street slips on its feet with Nasdaq leading the fall.
The Nasdaq Composite (.IXIC) went down by 1.16% or 188.26 points, Dow Jones Industrial Average (.DJI) lost about 0.18% or 38,722.69 points, and S&P 500 (.SPX) fell 0.65% or 33.65 points.
The biggest loser of the 11 sectors listed in S&P was the technology index which was down by 1.8%, followed by consumer staples at 0.8%.
Charlie Ripley, Senior Investment Strategist for Allianz Investment Management said that, “People may be taking some chips off the table. We’ve had a decent run. Some of the technology names had moved up quite a bit.”
Moreover he said that, “When you’ve markets which have run up as much as this has since the start of the year, with returns coming in as strong as they have, these types of pull backs are healthy to see.”
