Wall Street closed sharply lower on Tuesday, pulled down by tech and healthcare stocks. Investor mood was grim as tech stocks slid on valuation and AI-spending worries, while healthcare names fell after weak earnings outlooks and policy-related reimbursement concerns. All three benchmark indexes finished in the red.
How Did the Benchmarks Perform?
The Dow Jones Industrial Average (DJI) lost 0.3%, or 166.67 points, to close at 49,240.99. Seventeen components of the 30-stock index ended in negative territory, while 13 ended in the positive.
The tech-heavy Nasdaq Composite fell 336.92 points, or 1.4%, to close at 23,255.19.
The S&P 500 slid 0.8%, or 58.63 points, to close at 6,917.81. Six of the 11 broad sectors of the benchmark index closed in the red. The Technology Select Sector SPDR (XLK), the Communication Services Select Sector SPDR (XLC) and the Health Care Select Sector SPDR (XLV) declined 2.2%, 1.3% and 1%, respectively, while the Energy Select Sector SPDR (XLE) jumped 3.3%.
The fear gauge CBOE Volatility Index (VIX) increased 10.16% to 18.00. A total of 23.5 billion shares were traded on Tuesday, higher than the last 20-session average of 19.6 billion. Advancers outnumbered decliners by a 1.2-to-1 ratio on the S&P 500.
Wall Street Sinks as Tech and Healthcare Weigh on Sentiment
Investor sentiment turned sharply negative on Tuesday as renewed worries around the tech and healthcare sectors dragged major indexes lower. Traders grew cautious amid signs that the market’s earlier optimism had run ahead of fundamentals, prompting a broad risk-off move.
Technology stocks led the decline as concerns resurfaced over stretched valuations and slowing returns on massive AI-related spending. Investors questioned whether lofty earnings expectations could be sustained in an environment of higher interest rates and tightening financial conditions, triggering profit-taking in heavyweight names.
Healthcare shares also came under pressure after several companies issued cautious earnings outlooks. Uncertainty surrounding drug pricing reforms, reimbursement policies and rising operating costs further dampened confidence. Just ahead of its earnings date, Novo Nordisk A/S NVO stock slumped 14.6% after the company stated its expectation of a steep sales decline, further weighing on the health sector. Together, weakness in these two influential sectors set a gloomy tone for the session, reinforcing fears that market volatility may persist in the near term.
Consequently, shares of Salesforce, Inc. CRM and Microsoft Corporation MSFT declined 6.9% and 2.9%, respectively. While CRM carries a Zacks Rank #2 (Buy), MSFT has a #3 (Hold). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
Oil Jumps on Hormuz Tensions and U.S.-Iran Standoff
Oil prices surged roughly 2% on Tuesday after the United States downed an Iranian drone and armed Iranian boats moved close to a U.S.-flagged ship in the Strait of Hormuz, heightening fears that efforts to cool U.S.-Iran tensions could unravel. Brent crude gained $1.03, or 1.6%, to settle at $67.33/barrel, while WTI crude advanced $1.07, or 1.7%, to end at $63.21.
No economic data was released on Tuesday.
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Microsoft Corporation (MSFT): Free Stock Analysis Report Salesforce Inc. (CRM): Free Stock Analysis Report Novo Nordisk A/S (NVO): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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