October 2, 2023

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Wall Street falls as growth stocks in the S&P 500 and Nasdaq decline

  • Tesla is falling behind because of the reduced production plan
  • Southwest Airlines declines after canceling its holiday flights
  • Optimism about China optimism rises as optimism reopens
  • Indices are mixed: Dow Jones up 0.21%, S&P 0.36%, Nasdaq down 1.22%

NEW YORK (Reuters) – Wall Street mostly fell at the start of a week shorter than a holiday on Tuesday as investors weighed the possibility of the Federal Reserve’s prolonged policy imposition against China relaxing its strict anti-coronavirus rules.

Interest rate sensitive growth stocks (.IGX) heavier, dragging down the tech-laden Nasdaq the most. The S&P 500 joined the Nasdaq in negative territory, while the Dow was supported by value stocks. (.IVX)It was a modest green.

“On low days value tends to do well compared to growth,” said Tim Gresky, chief portfolio strategist at Ingalls & Snyder in New York.

“Not a lot of news, little volume, the China issue is there, the normalization of the post-COVID environment,” Gresky added.

Shares of Tesla Inc (TSLA.O) It fell 8.3% after a Reuters review of an internal timeline revealed the electric car maker’s plans to scale back production at its Shanghai plant.

With Tuesday’s move, Tesla stock has lost nearly 68% of its value this year.

Rising Treasury yields have put interest rate-sensitive growth stocks under pressure, a recurring theme in 2022. For the year, growth stocks have fallen more than 30% compared to a decline in value of about 7.5% over the same period.

With only four trading days left in 2022, all three indices are on track to post their biggest annual loss since 2008, the nadir of the global financial crisis.

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“(This year) it was all about the Fed raising interest rates, maybe of late,” Greske said. The power of lowering inflation to 2% has shocked the market and investors.

Beijing has eased its tough coronavirus restrictions, which have battered the $17 trillion economy, boosting hopes of a recovery in global demand and an improvement in the supply chain.

On the economic front, the Commerce Department’s preliminary take of the US goods trade balance showed the deficit shrinking 15.6%, while S&P Case-Shiller showed home price growth in the 20 composite cities cool to 8.6% year over year. The lowest reading since November 2020.

Dow Jones Industrial Average (.DJI) The Standard & Poor’s Index rose 68.31 points, or 0.21%, to 33,272.24. (.SPX) It lost 13.95 points, or 0.36%, to 3,830.87 points, and the Nasdaq Composite. (nineteenth) It fell 128.05 points, or 1.22%, to 10,369.81 points.

Among the 11 major sectors in the S&P 500, as measured by consumer discretion (.SPLRCD) and communication services (.SPLRCL) suffered the largest percentage loss.

energy stock (.SPNY) It was the biggest gainer, rising 1.2% as crude oil prices rose on an expected support to demand from China’s easing COVID restrictions.

Shares of US-listed Chinese companies including JD.Com Inc, Alibaba Group Holding Ltd, and Pinduoduo Inc (PDD.O) It gained between 2% and 4.2% after Beijing announced it was easing travel restrictions.

Southwest Airlines (LUV.N) It fell 5.5% after severe weather forced the discount commercial airline to lead its peers in cancellations. The broader S&P 1500 Airlines index (.SPCOMAIR) It was 2.4%.

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Low issues outnumbered high issues on the NYSE by a ratio of 1.32 to 1; On the Nasdaq, the ratio was 1.86 to 1 in favor of declining stocks.

S&P 500 records 7 new highs in 52 weeks and 3 new lows; The Nasdaq index posted 74 new highs and 377 new lows.

Reporting by Stephen Kolb in New York Additional reporting by Amruta Khandekar and Ankika Biswas in Bengaluru Editing: Matthew Lewis

Our standards: Thomson Reuters Trust Principles.