Traders on the floor of the New York Stock Exchange (NYSE) faced a challenging beginning to the final week of February, with stock futures showing minimal movement. Futures linked to the Dow Jones Industrial Average rose by a modest 45 points, or nearly 0.1%, while S&P 500 and Nasdaq 100 futures also increased by 0.1%.
Despite this slight uptick in futures, major averages took a significant hit during regular trading hours. The Dow experienced a steep decline, dropping nearly 822 points, or about 1.7%, largely influenced by a 13% plummet in IBM shares. The Nasdaq Composite fell by 1.1%, and the S&P 500 slipped approximately 1%, pushing it into negative territory for the year. The downturn was exacerbated by losses in the software sector, with notable declines in shares of Microsoft and CrowdStrike, as well as a series of setbacks in cybersecurity and various financial stocks.
Market analysts are particularly concerned about the market’s momentum, suggesting that recent rotations among sectors are indicating an unhealthy trend. Warren Pies, co-founder and strategist at 3Fourteen Research, expressed his views on CNBC’s “Closing Bell,” highlighting the significant shifts in sector performance. He noted consumer staples and energy sectors showing double-digit increases in the last quarter, while tech and financial stocks struggled. Pies has a cautious outlook, recommending investors reduce risk and wait for the market’s current range to break before making larger commitments.
He further elaborated that a shift towards a bullish outlook necessitates a recovery led by tech stocks. Pies maintains that while the market is consolidating after this recent pullback, a strategic wait for definitive movement is prudent.
As the market heads into Tuesday, all eyes are on a critical event hosted by Anthropic, a prominent artificial intelligence firm responsible for Claude. The firm is set to unveil new product features and developments, intensifying the market’s anticipation and contributing to the recent declines in software stocks.
Traders will also be looking forward to upcoming economic indicators, including consumer confidence data, along with earnings reports from Home Depot. Key earnings announcements from companies such as Nvidia, Salesforce, and Snowflake later in the week are expected to be pivotal, potentially impacting market performance amid the ongoing tech sector downturn.
