Tech Giants Drag Down U.S. Stocks: All Three Major Indices Close Lower, Nasdaq Under Pressure

Overnight, the U.S. stock market experienced a broad sell-off, with all three major indices closing lower. The tech-heavy Nasdaq Composite Index notably underperformed the Dow Jones Industrial Average, as large-cap tech stocks like Apple and Tesla were the main drags. Market analysts pointed to a reassessment of the Federal Reserve's future policy path and cautious sentiment ahead of earnings season for some tech giants as key drivers of this correction.

Tech Giants Lead Decline, Nasdaq Under Pressure

In Tuesday's trading, the Nasdaq fell the most, dropping over 1% at one point. Apple and Tesla shares declined about 2% and 3%, respectively, becoming the biggest drags on the Nasdaq. According to market observers, Apple faces concerns over slowing iPhone demand, while Tesla is under pressure due to intensifying global competition in the EV market and delivery data falling short of expectations. Additionally, other tech giants like Microsoft, Amazon, and Alphabet (Google's parent company) also moved lower, exacerbating the Nasdaq's weakness.

In contrast, the Dow's decline was relatively limited, supported by traditional sectors such as energy and finance. Components like Chevron and JPMorgan Chase rose against the trend, partially offsetting the negative impact from tech stocks. This divergence reflects a rotation of funds from high-growth stocks to value stocks, indicating a shift in investor preferences for interest rate-sensitive assets.

Fed Policy Expectations Take Center Stage

One of the core drivers of this U.S. stock decline is the repricing of market expectations for Fed monetary policy. Recent U.S. economic data showed that inflation is slowing more slowly than expected, while the labor market remains strong. This prompted traders to reduce their bets on the magnitude of Fed rate cuts this year. According to CME FedWatch data, the market now sees about a 70% probability that the Fed will hold rates steady at its June meeting, up from around 50% just a month ago.

Fed Chair Jerome Powell reiterated in recent remarks that policymakers need to see more evidence of sustained inflation declines before considering easing policy. This hawkish stance unsettled markets, with investors fearing that high interest rates will persist longer, thereby suppressing corporate earnings growth and valuation expansion. Tech stocks, being one of the most interest rate-sensitive sectors, bore the brunt of the impact.

Market Sentiment and Outlook

Despite the overall decline in U.S. stocks overnight, market sentiment is not entirely pessimistic. Some analysts view this pullback as a technical correction rather than a trend reversal. The U.S. economic fundamentals remain solid, and corporate earnings growth expectations have not significantly deteriorated. Moreover, the ongoing investment boom in emerging areas like artificial intelligence continues to provide long-term support for tech stocks.

However, short-term risks cannot be ignored. Later this week, the U.S. will release March Consumer Price Index (CPI) and Producer Price Index (PPI) data, which will be key variables influencing Fed policy expectations. If inflation data surprises to the upside, it could trigger further market selling. Additionally, the tech giants' earnings season is about to begin, and the guidance from companies like Apple and Tesla will directly determine the Nasdaq's next moves.

From a technical perspective, the Nasdaq is currently near a key support level. If the index breaks below its previous low, it could trigger larger-scale stop-loss selling. Conversely, if it stabilizes and rebounds from current levels, it could regain upward momentum. Investors should closely monitor the release of macro data and corporate earnings, adjusting positions flexibly.

Risk Warning

The above content is for reference only and does not constitute investment advice. The stock market carries risks, and investment should be made with caution. The views, data, and analysis presented in this article are based on publicly available information, and their accuracy, completeness, or timeliness cannot be guaranteed. Investors should make independent decisions based on their own risk tolerance and investment objectives.