New York’s stock exchange suffered a significant drop on Tuesday, fuelled by profit-taking and investors’ concerns for the global economy.
The Nasdaq index took a 3.26% tumble, while the Dow Jones lost 1.51% and the broader S&P 500 index dropped 2.12%.
“Wall Street has been hit by the September blues,” observed José Torres of Interactive Brokers.
September is traditionally a poor month for stocks, which have ended in the negative during this month for the past four years.
The microprocessor industry, fuelled by enthusiasm for generative artificial intelligence (AI) for nearly two years, was Tuesday's first victim.
Nvidia, the sector's superstar, plunged by 9.53%. On Tuesday alone, the Santa Clara, California, flagship shedded nearly $280 billion of market capitalisation, more than the total valuation of Toyota, Hermès or Pepsico.
Sam Burns, Head of Investment Strategy at Mill Street Research, said companies had produced good results but not enough to meet expectations. He believes investors focused mainly on profit-taking and porfolio rebalancing on Tuesday, but did not feel the session was a precursor to a more significant correction.
Other stocks caught up in the selling trend included Apple (- 2.72%) and Alphabet (-3.94%), which had had an impressive recovery since early August.
Wall Street was also gripped by fears of an economic downturn, in light of mixed data from China in recent days and figures from the United States.
US manufacturing activity remained in contraction mode in August, according to the Institute for Supply Management (ISM). It increased compared to July but less than expected.
Moreover, according to the ISM report, new orders dropped to their lowest level since May 2023.
On the stock exchange, the volatility benefited so-called defensive stocks, theoretically less sensitive to the vagaries of the economy, such as Coca-Cola, up by 0.75%, health insurer UnitedHealth, up by 1.44% - the largest weighting in the Dow Jones index - and cable operator Verizon, up by 2.75%.
Boeing saw a sharp drop of 7.32%, with investors increasingly worried about the impending expiry - on 12 September - of the corporation’s agreement with the International Association of Machinists and Aerospace Workers.
Without an agreement by then, nearly 32,000 members of the union could go on strike.
US Steel, down by 6.09%, was penalised by statements by Democratic presidential candidate Kamala Harris, who said she wants to keep the steelmaker under American control.
US President Joe Biden had previously stated that he wanted to block the takeover of US Steel by Nippon Steel of Japan, announced last December but suspended due to a lack of regulatory approval.
