Tech stocks, Home Depot pull down S&P 500 and Dow from record highs
Wall Street’s main indexes fell on Tuesday, weighed down by a decline in mega-cap technology-related stocks and a weak earnings report from Home Depot, while retail sales data showed the pace of the U.S. economic recovery moderated in July.
Home Depot dropped 4.6% after it missed Wall Street estimates for U.S. same-store sales for the first time in two years, as do-it-yourself projects during the height of the pandemic tapered off.
The results also sent shares of smaller rival Lowe’s Companies Inc down 4.4%.
Heavyweight growth names Google-owner Alphabet Inc, Facebook Inc, Microsoft Corp, Tesla Inc and Amazon.com fell between 0.4% and 3.1%, pulling the S&P 500 and the Dow from record highs.
Data showed U.S. retail sales fell more than expected in July as shortages weighed on purchases of motor vehicles, while fears over the Delta variant of COVID-19 kept consumers home.
“It shouldn’t be terribly surprising given how much the Delta variant has gotten worse, and a lot more people are starting to stay home now a little bit more than they have been,” said Randy Frederick, managing director of trading and derivatives at Schwab Center for Financial Research.
A Wall Street sign is pictured outside the New York Stock Exchange in New York, October 28, 2013. REUTERS/Carlo Allegri
Ten of the 11 major S&P sectors fell in early trading, with consumer discretionary shares leading declines. The healthcare sector was the sole gainer.
At 9:52 a.m. ET, the Dow Jones Industrial Average was down 299.67 points, or 0.84%, at 35,325.73, the S&P 500 was down 31.57 points, or 0.70%, at 4,448.14, and the Nasdaq Composite was down 135.71 points, or 0.92%, at 14,658.06.
Global equities started the week on the backfoot as tighter scrutiny of China’s internet sector and signs of a slowing economic recovery, particularly in China, drove investors towards defensive parts of the market.
Still, the benchmark S&P 500 and the Dow industrials closed at record highs on Monday as investors weighed concerns about a resurgence in global COVID-19 cases, the Federal Reserve’s potential policy tapering moves against a stellar earnings season.
“The market is near all-time highs so it certainly is due for a breather, but I wouldn’t expect any material type of crashes or corrections,” said Thomas Hayes, managing member at Great Hill Capital in New York.
Related Articles
“There’s simply too much liquidity in the system, and there’s still confidence that Delta is going to be a transient spike that will resolve itself in coming weeks.”
Focus is now on minutes from the Fed’s latest meeting, due on Wednesday, after Boston Fed President Eric Rosengren said that one more month of strong job gains could satisfy the central bank’s requirements for beginning to reduce its monthly asset purchases.
Walmart Inc rose 0.5% after the world’s No. 1 retailer increased its annual U.S. same-store sales forecast.
Declining issues outnumbered advancers for a 3.74-to-1 ratio on the NYSE and for a 3.32-to-1 ratio on the Nasdaq.
The S&P index recorded 21 new 52-week highs and two new lows, while the Nasdaq recorded 16 new highs and 205 new lows.
(Reporting by Devik Jain and Ambar Warrick in Bengaluru; Editing by Maju Samuel)
