Nasdaq closes Monday at 2-year low, hurt by falling chip stocks
Stocks closed lower on Monday, with the Nasdaq Composite Index falling to its lowest level in two years as tech stocks continue to be the hardest hit in this bear market due to soaring interest rates.
The Nasdaq Composite closed down 1.04% at 10,542.10, hitting its lowest close since July 2020, weighed down by a slump in semiconductor stocks such as Nvidia and AMD. The S&P 500 also fell 0.75% to 3,612.39, dragged lower by semi-stocks and declines in big tech names like microsoftwhile the Dow Jones Industrial Average fell 93.91 points, or 0.32%, to close at 29,202.88.
The declines came as JPMorgan CEO Jamie Dimon warned that the US is likely to fall into a recession in 2023 and it may not just be an economic contraction like some economists l have planned.
A policy shift weighed on semiconductor stocks after the Biden administration announced new export controls that limit U.S. companies selling advanced computer semiconductors and related manufacturing equipment to China. Tech stocks have also been the hardest hit by this selloff, as rising rates expose their relatively high valuations and raise their cost of capital.
While the bond market was closed, 10-year Treasury bond futures were down on Monday, indicating yields would continue to rise on Tuesday. Yields move inversely to prices. The price of 10-year Treasury futures fell about 0.6%. Trading volume was also lower than normal on Monday due to the Columbus Day holiday.
“There are a lot of market participants who are really interested in what Treasury yields are doing, and when they’re not open, it’s hard to get that volume in the market,” said Art Hogan, Chief Market Strategist at B. Riley Financial. . “We’re probably going to be in hold mode until we open full force tomorrow.”
Investors were also cautious ahead of major earnings and inflation reports this week, which will shed new light on the US economy. Four of the largest banks in the world – JP Morgan, Wells Fargo, Morgan Stanley and Town – report Friday. PepsiCo, Delta and Dominoes are also among the companies reporting next week.
The September producer price index data arrives on Wednesday and the consumer price report is due out on Thursday.
The Nasdaq’s losses for the year are now over 32% after Monday’s decline. The S&P 500 is down more than 24% in 2022.