Wall St’s Nasdaq, S&P down; Apple leads tech losses; Dow books record close

US tech giants, led by Apple, started 2024 on a gloomy note with Wall Street’s Nasdaq and S&P indexes closing in the red. The Dow though booked a record close.

Tumbling technology stocks cast a pall over the first trading day for 2024 in which the Dow Jones Industrial Average ended at a new all-time high, showing how much sway a few giant technology firms have over the broader market.

The tech-heavy Nasdaq Composite Index declined 1.6 per cent, dragged down by the same big names, including Apple and Nvidia, that propelled it 43 per cent higher last year.

A good day for energy, healthcare, utilities and consumer-staples stocks couldn’t offset the pull from technology and telecom shares in the S&P 500, which shed 0.6 per cent.

The Dow Jones Industrial Average, which has risen for nine consecutive weeks, eked out a 0.1 per cent gain, or 25.5 points, to close at a new record of 37,715.04 points.

Rising bond yields contributed to the sell-off in tech stocks.

The yield on the benchmark 10-year US Treasury note ended overnight at 3.94 per cent. Yields rise as prices fall.

There is growing doubt that the big tech stocks that powered last year’s rally can keep rising. The so-called Magnificent Seven stocks swelled last year to represent about 30 per cent of the S&P 500’s market value and were responsible for much of the index’s 24 per cent gain.

Minus Apple, Amazon.com, Google parent Alphabet, Microsoft, Nvidia, Facebook owner Meta Platforms and Tesla, the S&P 500 rose 13 per cent last year.

Jason Pride, chief of investment strategy and research at money manager Glenmede, said his firm has skewed its investments slightly toward fixed income and trimmed its exposure to equities, particularly the big seven stocks.

“Many of them are fantastic businesses, but there’s a point in time when any business can be overvalued,” Pride said. “I think about this as playing the field rather than betting on the leaders.”

Apple, which climbed to an all-time high in December, shed 3.6 per cent overnight after analysts at Barclays downgraded its shares to a bearish “underweight” rating and trimmed their price target for the stock.

“We are still picking up weakness on iPhone volumes and mix, as well as a lack of bounce-back in Macs, iPads and wearables,” they wrote in a note to clients.

Amazon.com, Alphabet and Microsoft each lost more than 1 per cent.

Chip maker Nvidia and Meta dropped more than 2 per cent.

Tesla lost less than 0.1 per cent after the electric-car maker said it delivered 1.81 million vehicles last year. Tesla met its own 2023 production target and topped Wall Street’s estimate yet fell behind China’s BYD as the world’s largest seller of electric vehicles for the last quarter.

Apple shares fell after an analyst warning. Picture: Mario Tama/AFP

Moderna was the S&P 500’s top performer. The drugmaker’s shares popped 13 per cent after Oppenheimer analysts upgraded the stock and Moderna chief executive Stéphane Bancel wrote in a letter to shareholders that it expects sales growth in 2025.

Shares of JPMorgan Chase closed at a record high. The financial giant’s shares ended the day at $US172.08, beating the $US171.78 at which they finished December 22, 2021.

Citi shares soared 3 per cent after Wells Fargo banking analyst Mike Mayo started 2024 with a bold call: Citigroup’s stock will more than double over the next three years. Citi is his top banking pick and in the midst of a turnaround. He put a $US70 one-year target on the stock and said his base case is for $US119 in 2026. It closed at $US53.04 overnight.

A big question among investors heading into 2024 is whether the US consumer will continue to buoy markets by spending. Last year, companies in the S&P 500 that depend on discretionary consumer spending were among the index’s top performers.

“We’ve had a strong consumer, but we do have some reasons to be cautious, particularly lower-income consumers,” said Amber Fairbanks, portfolio manager at Impax Asset Management. “We’re already beginning to see some cracks.”

Cruise stocks led the S&P 500 lower, sinking even more than technology shares. Norwegian Cruise Line Holdings, Royal Caribbean Group and Carnival lost 8.6 per cent, 7.2 per cent and 6.7 per cent, respectively, a sign of scepticism that consumers will keep spending like they have since the Covid lockdowns ended.

Oil prices settled lower after rising in early trading when Iranian state media reported that Tehran sent a warship to the Red Sea. Shipping giant Maersk said it would pause all transit through the Red Sea and the Gulf of Aden.

Global benchmark Brent crude was flat near $US76.07 per barrel, while US WTI fell 1.6 per cent to $US70.50 per barrel.

Bitcoin climbed above $US45,000.

Last year ended with a rally in most assets, spurred by a belief that the Federal Reserve is about to start cutting interest rates. Derivative markets place a high likelihood on the first cut coming as soon as March.

On Wall Street, optimism abounds about the prospects for the stock market in 2024.

– The Wall Street Journal