Stocks Fall as Weakness in Tech Sector Persists
Palo Alto Networks and technology sector face heavy losses
New York, NY – Stocks on Wall Street saw a decline on Wednesday, with technology companies continuing to bear the brunt of the market’s weakness.
In afternoon trading, the S&P 500 slipped 0.3%, while the Nasdaq, heavily influenced by technology stocks, dropped 0.7%. The Dow Jones Industrial Average also saw a slight decline of 0.1%, equivalent to 52 points.
Palo Alto Networks, a prominent player in the technology sector, experienced a significant setback, with its stock sinking 27.2%. This was primarily due to the company’s below-expectation forecasts for future billings. Fortinet, one of its rivals, also slumped, experiencing a 4.6% decline.
Meanwhile, bond yields remained relatively stable, with the 10-year Treasury yield rising to 4.32% from 4.28%.
In global markets, Europe mostly saw gains, while Asia experienced mixed results.
On Wall Street, earnings remained a key focus, with highly anticipated results from Nvidia set to be released later in the day.
Several other companies also made notable moves following the release of their financial results. Keysight Technologies saw its stock fall by 7.3% after its profit forecast failed to meet analysts’ expectations. Conversely, Toll Brothers experienced a 4.1% increase in stock value after providing investors with an encouraging financial update, citing strong demand. This positive news contributed to gains in the homebuilding sector.
Energy companies saw some gains as natural gas prices surged by 12.3%. Exxon Mobil, in particular, saw a 1.9% increase in stock value.
Later in the day, the Federal Reserve is set to release the minutes from its most recent meeting, where it decided to leave its benchmark lending rate unchanged for the fourth consecutive time.
Looking ahead, investors will have to wait until next week for an important update on inflation. The central bank’s objective has been to bring inflation back to 2%, and analysts predict that the upcoming report will show it cooling down to 2.3% in January. It is worth noting that inflation reached a peak of 7.1% in June 2022, based on this measure.
Separate measures for consumer and wholesale prices in January indicate that inflation has not cooled as much as anticipated. This has prompted investors to adjust their expectations for rate cuts from March to June. Additionally, a disappointing report on retail sales has raised concerns that persistent inflation is negatively impacting consumers. This, in turn, may result in tighter consumer spending, adding pressure on businesses in 2024.
Analyst comment
Negative news. The weakness in the tech sector has led to a decline in stocks on Wall Street, particularly in technology companies. Palo Alto Networks suffered heavy losses, impacting the sector. Bond yields remained stable, and global markets had mixed results. Earnings reports were mixed, with some companies falling short of expectations while others saw positive results. The Federal Reserve’s minutes will be released later in the day, and investors are awaiting an important update on inflation next week, which may impact rate cuts. Persistent inflation is a concern for consumer spending and businesses in 2024.
