Nasdaq 100, Dow Jones, S&P 500 News: Tech Stocks Under Pressure Led by Tesla, Apple

U.S. Stock Market Overview

The U.S. stock market is experiencing notable weakness on Tuesday, particularly impacting technology stocks and leading to a downturn in the Nasdaq Composite.

At 15:48 GMT, the Dow Jones Industrial Average is trading 38788.55, down 201.28 or -0.52%. The S&P 500 Index is at 5088.29, down 42.66 or -0.83% and the Nasdaq-100 Index is trading 15929.04, down 278.47 or -1.72%.

Tesla’s Challenges

Tesla’s share price dropped by 5% following an incident at its Berlin Gigafactory. A suspected arson attack at a nearby power station has halted production, potentially for the week. The attack was claimed by the “Volcano Group,” a left-wing extremist group, and is under investigation by local authorities. This event exacerbates ongoing opposition to Tesla’s expansion plans in Germany, which includes doubling its production capacity.

Economic Indicators

The Institute for Supply Management’s services index for February indicated a slight slowdown in service industries, with a drop to 52.6 from 53.4 in January. However, a notable decrease in the prices index suggests easing inflation concerns.

Tech Sector Turmoil

Apple Inc. faced a 3% decline in its shares due to a significant 24% drop in iPhone sales in China during the first six weeks of 2024. Other major tech companies, including Netflix and Microsoft, also experienced declines. Conversely, companies like Target and AeroVironment saw positive movements following strong earnings reports.

Cryptocurrency Surge

In a contrasting development, Bitcoin reached an all-time high, marking its first peak in over two years.

Short-Term Forecast

The short-term outlook for the U.S. stock market, particularly the technology sector, leans bearish. Tesla’s operational disruption, Apple’s sales slump in China, and regulatory challenges faced by AMD suggest potential headwinds. However, the easing inflation indicated by the ISM services index and success stories like Target and AeroVironment provide some counterbalance. Investors should brace for volatility with a cautious eye on developments in the tech sector and macroeconomic indicators.

Technical Analysis

E-mini Nasdaq-100 Index futures are sharply lower on Tuesday, putting the tech-heavy index in a position to change the short-term trend to down. A trade through 17826.00 will change the trend.

If this move leads to an acceleration to the downside, then this will put the 50-day moving average at 17455.66 on the radar, making it our next major target.

A trade through 18377.75 will signal a resumption of the uptrend. The index is also lower for the week after reaching an all-time high on Monday. This puts the market in a position to post a potentially bearish closing price reversal top.