Wall Street closed mixed on Tuesday, pulled down by tech stocks. Investor mood remained subdued as they eagerly await Fed Chair Jerome Powell’s comments at the Jackson Hole symposium. One of the three benchmark indexes closed virtually flat, one closed in the green, while one closed firmly in the red.
How Did the Benchmarks Perform?
The Dow Jones Industrial Average (DJI) remained virtually unchanged, rising 10.45 points, to close at 44,922.27. Fourteen components of the 30-stock index ended in negative territory, while 16 ended in positive.
The tech-heavy Nasdaq Composite tumbled 314.82 points, or 1.5%, to close at 21,314.95.
The S&P 500 lost 37.78 points, or 0.6%, to close at 6,411.37. Yet, eight of the 11 broad sectors of the benchmark index closed in the green. The Real Estate Select Sector SPDR (XLRE), the Consumer Staples Select Sector SPDR (XLP) and the Utilities Select Sector SPDR (XLU) advanced 1.8%, 1% and 0.1%, respectively, while the Technology Select Sector SPDR (XLK) declined 1.8%.
The fear gauge CBOE Volatility Index (VIX) increased 3.9% to 15.57. Advancers outnumbered decliners by a 1.06-to-1 ratio on the NYSE.
Tech Stocks Weigh on the Markets
On Tuesday, tech stocks took a hit primarily due to growing investor unease ahead of Fed Chair Jerome Powell’s upcoming speech at Jackson Hole, an event that tends to influence expectations around interest rates and monetary policy. Markets, particularly the tech sector, are sensitive to shifts in that narrative. Concerns about over-valuations, especially given a growing wave of skepticism over the sustainability of the AI boom, further compounded selling pressure. A recent MIT report showing that 95% of companies aren’t seeing meaningful returns on generative AI investments heightened caution, echoing broader concerns that the tech-driven rally may lack durable fundamentals.
These concerns catalyzed a sharp pullback in technology firms, dragging the Nasdaq lower. The tech-heavy index marked its largest single-day decline since early August. Given the Nasdaq’s heavy reliance on high-growth tech names, a sector-wide retreat naturally exerted significant pressure on the index. In essence, the stumble reflected rising caution over lofty valuations, a potential peak in the AI euphoria and trepidation ahead of pivotal central bank communication. These forces combined to tip the balance against tech stocks in the session, fueling their collective slide and weighing heavily on the markets.
Palantir Technologies Inc. PLTR and NVIDIA Corporation NVDA weighed particularly heavily on the markets, falling 9.4% and 3.5%, respectively. PLTR currently has a Zacks Rank #2 (Buy), while NVDA carries a Rank #3 (Hold). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
Economic Data
Per the U.S. Census Bureau and the U.S. Department of Housing and Urban Development, Building Permits for July had come in at 1,354,000. The number for June was revised down to 1,393,000 from the previously reported 1,397,000.
According to the same report, Housing Starts for July had come in at 1,428,000. The number for June was revised up to 1,358,000 from the previously reported 1,321,000.
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NVIDIA Corporation (NVDA): Free Stock Analysis Report Palantir Technologies Inc. (PLTR): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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