Tech Sector Weakness May Weigh On Wall Street
25 Março 2024 - 10:26AM
IH Market News
The major U.S. index futures are currently pointing to a lower
open on Monday, with stocks likely to move to the downside after
ending last Friday’s choppy session mixed.
Weakness among technology stocks may weigh on the markets, as
reflected by the 0.5 percent drop by the Nasdaq 100 futures.
Shares of Intel (NASDAQ:INTC) and Advanced Micro Devices
(NASDAQ:AMD) are likely to come under pressure after a report from
the Financial Times said China has introduced new guidelines to
phase the company’s microprocessors out of government PCs and
servers.
As part of a campaign to replace foreign technology with
homegrown solutions, FT said stricter government procurement
guidance also seeks to sideline Microsoft’s (NASDAQ:MSFT) Windows
operating system and foreign-made database software in favor of
domestic options.
News that Atlanta Federal Reserve President Raphael Bostic has
scaled back his forecast to just one interest rate cut this year
after previously projecting two rate cuts may also generate some
negative sentiment.
Projections provided along with the Fed’s monetary policy
announcement last week suggested Fed officials still expect three
rate cuts this year.
Overall trading activity may be somewhat subdued, however, as
traders look ahead to the release of some key economic data in the
coming days.
Traders are likely to keep an eye on reports on durable goods
orders, consumer confidence and pending home sales, although a
report on personal income and spending that includes readings on
inflation said to be preferred by the Fed will be released when the
markets are closed for Good Friday.
After trending higher for several sessions, stocks turned in a
relatively lackluster performance during trading on Friday. The
major averages fluctuated over the course of the session before
eventually ending the day mixed.
While the Nasdaq inched up 26.98 points or 0.2 percent to a new
record closing high of 16,428.82, the S&P 500 edged down 7.35
points or 0.1 percent to 5,234.18 and the Dow slid 305.47 points or
0.8 percent to 39,475.90.
Despite the mixed performance on the day, the major averages all
moved sharply higher for the week. The Nasdaq spiked by 2.9
percent, the S&P 500 surged by 2.3 percent and the Dow jumped
by 2.0 percent.
Profit taking contributed to modest weakness in early trading,
with some traders looking to cash in on the recent strength in the
markets.
Selling pressure remained relatively subdued, however, as
traders remain optimistic about the outlook for interest rates
following the Federal Reserve’s monetary policy announcement
earlier in the week.
While the timing of the first rate remains somewhat uncertain
the chances of a quarter point rate cut in June have rebounded to
66.5 percent, according to CME Group’s FedWatch Tool.
Nvidia (NASDAQ:NVDA) helped lead a subsequent rebound by the
tech-heavy Nasdaq, with the chipmaker surging by 3.1 percent.
The AI darling, which has recently been a key driver of trading
on Wall Street, ended the day at a record closing high.
Shares of FedEx (NYSE:FDX) also spiked by 7.4 percent after the
delivery giant reported fiscal third quarter results that beat
expectations and announced a new $5 billion share repurchase
program.
Meanwhile, shares of Lululemon (NASDAQ:LULU) plunged by 15.9
percent after the athletic apparel retailer reported better than
expected fiscal fourth quarter results but provided disappointing
guidance.
Athletic footwear and apparel giant Nike (NYSE:NKE) also tumbled
by 6.9 percent after reporting fiscal third quarter earnings and
revenues that exceeded estimates but slowing growth in China.
Most of the major sectors showed only modest moves on the day,
but financial stocks saw considerable weakness after moving sharply
higher over the two previous sessions.
Reflecting the weakness in the sector, the NYSE Arca
Broker/Dealer Index slid by 1.7 percent and the KBW Bank Index fell
by 1.5 percent.
Notable weakness was also visible among telecom stocks, as
reflected by the 1.5 percent loss posted by the NYSE Arca North
American Telecom Index.
Gold, commercial real estate and airline stocks also moved to
the downside on the day, although selling pressure was relatively
subdued.
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