U.S. stocks closed sharply lower on Tuesday, erasing earlier gains, as a decline in the broader tech sector brought the major averages down.
Nasdaq composite fell 2.9 percent to 7,008.81 as shares of Apple and
Amazon declined. The S&P 500 pulled back 1.7 percent 2,612.62, with
tech sliding 3.5 percent and posting its worst day since Feb. 8. The Dow
Jones industrial average closed 344.89 points lower at 23,857.71 and
re-entered correction territory, with Microsoft as the worst-performing
stock in the index. Earlier in the session, the Dow rose 243 points,
while the S&P 500 and Nasdaq also traded higher.
shares contributed to tech's losses, as they fell 4.9 percent after Bank
of America Merrill Lynch reduced its price target on the stock for the
second time in five days. The cut comes as Facebook's fallout from the
data scandal continues.
Last week, reports emerged alleging that
Cambridge Analytica, an analytics company, had gathered data from 50
million Facebook profiles without users' permission. While Facebook has
since come out to apologize and try to rectify the matter, concerns
remain over data use.
CNN reported Tuesday that Facebook CEO Mark Zuckerberg will testify in front of Congress on the Cambridge Analytica leak.
this will not be a pleasant experience for Zuckerberg and his team
going in front of Congress, it is a necessary smart strategic step for
Facebook to head to the Beltway as the public fury continues to grow
around the Cambridge data leak," Daniel Ives, head of technology
research at GBH Insights.
Tech shares were also under pressure
after Reuters reported Nvidia is temporarily suspending self-driving
tests. The news sent the stock down 7.8 percent. Tesla shares also fell
8.2 percent after the U.S. National Transportation Safety Board
announced it would investigate a fatal crash that took place last week.
fell 12 percent after short-seller Andrew Left said he is betting
against the stock. "Everything's changed; everyone is talking about data
privacy," Left told CNBC. "They're a lot more vulnerable than
Netflix declined more than 6.1 percent. Stocks traded
higher earlier in the session, extending sharp gains seen in the
previous session as concerns over a trade war faded.
in an environment that's a bit hesitant, but yesterday was incredibly
important," said Michael Hans, CIO at Clarfeld Financial Advisors.
rallied sharply on Monday after the Wall Street Journal reported that
U.S. and Chinese officials were working to ease trade tensions between
the two countries. The major averages rose more than 2.5 percent,
notching their best one-day gains since August 2015.
confidence being restored in the market and that's because of fading
trade worries," said Peter Cardillo, chief market economist at First
Standard Financial. Some investors "could come back in the market or
renew long positions."
International markets also received a boost
Tuesday after Wall Street's strong day, with both Asian and European
indexes posting gains during their respective sessions.
market did what it needed to when it needed to on Monday, as the major
indices logged historically strong bounces across the board," said Frank
Cappelleri, executive director at Instinet. "This helped prevent large
bearish patterns from breaking."
Stocks had been under pressure
prior to Monday's rally as investors fretted over the economic
implications of a trade war between the U.S. and China.
President Donald Trump signed an executive memorandum that would
inflict tariffs on up to $60 billion in Chinese imports prompting China
to retaliate. The Dow briefly dipped into correction territory following
the news, while the S&P 500 reached its 200-day moving average, a
key technical level.
But J.P. Morgan U.S. equity strategist Dubravko Lakos-Bujas said in a note Tuesday investors should buy after the recent dip.
market appears to be overreacting to sequential negative narratives …,
we believe strong macro and fundamentals will continue to prevail,"
Lakos-Bujas wrote. "Most of the selling seen over this period has been
largely technical …, and as such represents a buying opportunity for
Bank of America Merrill Lynch said in a
note Monday that its clients bought the dip seen last week. "Big net
buys of US single stocks plus small inflows into ETFs led to total net
buys of $3.0bn," the note said.