U.S. Stocks Seeing Further Downside Following Early Pullback

Stocks have moved sharply lower over the course of the trading day on Tuesday, more than offsetting the strength seen in the previous session. The Dow reached a new record intraday high in early trading but has since joined the Nasdaq and the S&P 500 firmly in negative territory.

Currently, the major averages are just off their lows of the session. The Nasdaq is down 453.90 points or 1.9 percent at 23,138.21, the S&P 500 is down 85.29 points or 1.2 percent at 6,891.15 and the Dow is down 397.70 points or 0.8 percent to 49,009.96.

The sell-off on Wall Street largely reflects a rotation out of technology stocks, as reflected by the steep drop by the tech-heavy Nasdaq.

Software stocks are turning in some of the tech sector’s worst performances, dragging the Dow Jones U.S. Software Index down by 3.7 percent to its lowest intraday level in over nine months.

The weakness in the sector comes despite a surge by shares of Palantir Technologies (PLTR), which have shot up by 7.0 percent after the AI-powered software provider reported better than expected fourth quarter results and provided upbeat guidance.

Substantial weakness is also visible among semiconductor stocks, as reflected by the 3.1 percent plunge by the Philadelphia Semiconductor Index.

Shares of NXP Semiconductors (NXPI) have plummeted by 9.5 percent even though the Dutch chipmaker reported fourth quarter results that exceeded analyst estimates on the top and bottom lines.

Meanwhile, some stocks have benefited from the rotation out of tech, including retail giant Walmart (WMT), which has surpassed a $1 trillion market capitalization.

“It would be hard to find a better illustration of the market’s recent rotation away from tech than Walmart achieving a $1 trillion valuation for the first time,” said AJ Bell head of markets Dan Coatsworth.

He added, “This bastion of Main Street joins a club which has previously only been populated by technology businesses and Warren Buffett’s Berkshire Hathaway vehicle.

Gold stocks are also seeing considerable strength amid a significant rebound by the price of the precious metal, with the NYSE Arca Gold Bugs Index surging by 2.5 percent.

Steel, housing and energy stocks are also seeing notable strength on the day, helping to limit the downside for the broader markets

In overseas trading, stock markets across the Asia-Pacific region moved notably higher during trading on Tuesday. Japan’s Nikkei 225 Index soared by 3.9 percent, while China’s Shanghai Composite Index surged by 1.3 percent.

Meanwhile, the major European markets moved to the downside over the course of the session. While the U.K.’s FTSE 100 Index dipped by 0.3 percent, the German DAX Index edged down by 0.1 percent and the French CAC 40 Index closed just below the unchanged line.

In the bond market, treasuries are seeing modest weakness, extending the downward move seen over the two previous sessions. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is up by 1.2 basis points at 4.287 percent.