Market Recap: Stocks Fall as Tech Sell-Off Continues

Stocks fell Thursday as investors continued to pare positions in high-flying technology names while taking profits on recent runs elsewhere. The Dow Jones Industrial Average slid 544 points, or 1.3%, while the S&P 500 dropped 0.6% and the Nasdaq Composite lost 0.5%.

The sell-off was fueled by the growing likelihood of a September interest rate cut from the Federal Reserve, which has bolstered optimism in the broader market. This shift away from tech stocks came to a head on Wednesday when the Nasdaq tumbled 2.8%, marking its worst day since December 2022.

All but one of the 11 sectors that make up the S&P 500 traded lower on Thursday, with more than two out of every three Dow members also heading for losses. Even the small-cap focused Russell 2000 dropped close to 2% despite expectations for forthcoming interest rate cuts.

Keith Buchanan, senior portfolio manager at Globalt Investments, stated, “There’s some profit-taking. I kind of cringe a bit if the profit-taking occurs five days into a trade, but that just shows us the magnitude of what we’ve seen as far as the rotation.”

Despite Thursday’s declines, the Russell 2000 has jumped 7% in the last five trading days, while the Nasdaq has slipped more than 4% in the same period. The Dow was the only major index tracking for week-to-date gains, with an advance of more than 1%.

Overall, the market is experiencing a shift as investors rotate out of tech stocks and into other sectors. The week has seen fluctuations in various indexes, with small businesses expected to benefit from Fed easing rates.

With these developments, investors are exercising prudence and taking profits from the tech trade that has been highly profitable this year.