Just when the Federal Reserve prepares to reduce interest rates next week, Wall Street placed its thumb squarely on the scale with a big day of stock losses on Tuesday.
Suffering the worst trading day since March 2020, the start of the COVID-19 pandemic, the markets were led lower largely by tech stocks, specifically the producers of microchips.
The markets suffered major losses after the Labor Day weekend that saw the Dow Jones Industrial Average post another record-high. The Dow’s record was short lived as the indices lost 626.15 points (1.51%).
But the bigger losers by percentage were the Nasdaq Composite, which declined by 577.33 points (3.26%) during a brutal session for tech stocks. The S&P 500 fell 119.47 points (2.12%).
“The market right now seems to be very jumpy to any data that comes in,” Blue Chip Trend Report chief technical strategist Larry Tentarelli told CNBC. “We’ve become a very data-dependent market.”
Nvidia lost 9.5% and Intel dropped by 9% on the day to lead a massive decline for the semiconductor chip market. The new AI-powered chips have been climbing in value for over a year before Tuesday’s drop.
The Fed is expected to make the long-awaited announcement Sept. 10 that it will begin cutting interest rates from 23-year record highs. But Tuesday’s session raises questions about exactly how solid the ground is for investors.
