A man enters the New York Stock Exchange on Wednesday, July 17, 2024, in New York. Global stocks have mostly fallen, with shares in London declining after data showed the inflation rate remained steady at the Bank of England's 2% target in June. (AP Photo/Peter Morgan)
NEW YORK (AP) – A widespread washout across Wall Street dragged U.S. stocks lower. The S&P 500 fell 0.8% Thursday to pull further from its all-time high set on Tuesday. The Dow Jones Industrial Average sank 1.3% from its own record set a day before, while the Nasdaq composite was 0.7% lower. Apple, Microsoft and other Big Tech stocks once again led the market lower. Unlike much of the last week, Thursday’s losses hit many corners of the market. Smaller stocks, which had been cranking higher after badly lagging their larger rivals, fell more than the rest of the market.
THIS IS A BREAKING NEWS UPDATE. AP’s earlier story follows below.
NEW YORK (AP) – U.S. stocks tumbled Thursday in a widespread washout that stretched across Wall Street.
The S&P 500 dropped 0.9% to pull further from its all-time high set on Tuesday. The Dow Jones Industrial Average sank 483 points, or 1.2%, from its own record set a day before, while the Nasdaq composite was 1% lower, as of 2:45 p.m. Eastern time.
As they did Wednesday, when the Nasdaq tumbled to its worst loss since 2022, Big Tech stocks led the market lower. Drops of 2% for Apple, 1.4% for Microsoft and 2.2% for Amazon were three of the heaviest weights on the S&P 500.
Unlike much of the last week, though, Thursday’s losses hit many corners of the market. Smaller stocks, which had been cranking higher after badly lagging their larger rivals, fell more than the rest of the market. The Russell 2000 index lost 1.9% after jumping more than 1% in five of the last six days.
The majority of stocks within the S&P 500 also fell after giving up gains from earlier in the day. The sharpest loss came from Domino’s Pizza, which dropped 13.7% despite topping analysts’ expectations for profit in the spring.
The pizza chain temporarily suspended its forecast for how many stores will open globally over the long term. While that’s likely due to reasons beyond the company’s control, analysts said it could frustrate investors.
Darden Restaurants, the company behind Olive Garden, LongHorn Steakhouse and other chains, sank 3.4% for another one of the S&P 500’s larger losses. It said it would buy the Chuy’s Tex-Mex chain in an all-cash deal valuing it at $605 million. Chuy’s stock jumped 47.6%
Stocks of chip companies were mixed a day after tumbling amid worries about the potential for worsening tensions with China. U.S.-traded shares of Taiwan Semiconductor Manufacturing Co. initially rose after the industry giant reported stronger profit for the latest quarter than analysts expected, bouncing back from its loss of 8% the prior day. But TSMC’s U.S.-listed stock eventually slid back to a loss of 1.1%.
Nvidia, meanwhile, was 1.7% higher after likewise flipping between gains and losses during the day. It stretched its gain for the year to 142.3%.
Earlier this year, a climb for Nvidia and some of the other handful of stocks that came to be known as the “Magnificent Seven” may have been enough to prop up the rest of the market.
That’s what they did for a while, after all, as their stock prices rocketed amid a frenzy around artificial-intelligence technology, even as many other stocks struggled under the weight of higher interest rates. Because the S&P 500 and other indexes give more weight to stocks of bigger size, and because the Magnificent Seven stocks had all swelled into Goliaths, gains for Big Tech could drive up the market almost by themselves.
But a shift had gotten underway on Wall Street over the last week. Instead of piling into just Big Tech, investors have been moving toward smaller stocks, companies whose profits are closely tied to the economy’s strength and other areas that have been unloved for a while.
The momentum kicked into a high gear after an encouraging report on inflation raised expectations for the Federal Reserve to begin easing interest rates in September. Lower rates and a solid U.S. economy could give even more of a benefit to smaller companies than Big Tech giants, which rose almost regardless of such factors.
The market saw a similar such turn in momentum around the end of last year, but it didn’t last. Strategists at UBS led by Maxwell Grinacoff say they need to see several milestones “for this rotation to be real and sustainable.”
Among them, they say the job market and economic growth would need to sustain modestly over the next few months and inflation would have to continue to cool, among other things. In the meantime, more than a third of the smallest stocks remain unprofitable.
In the bond market, Treasury yields ticked higher following some mixed data on the economy.
One report said more workers applied for unemployment benefits last week than economists expected. That could be a signal of a softening job market, though the number remains low compared with history.
A separate report said manufacturing in the mid-Atlantic region is growing much better than economists thought.
The yield on the 10-year Treasury edged up to 4.18% from 4.16% late Wednesday.
Wall Street is hoping for the economy to remain in a “Goldilocks” state, where it’s not so hot that it puts upward pressure on inflation but not so cold that it slides into a recession.
Besides hopes for coming cuts to the Fed’s main interest rate, which has been sitting at its highest level in more than two decades, expectations for stronger profit growth from U.S. companies have also helped to drive stocks.
D.R. Horton jumped 9.7% for the largest gain in the S&P 500 after the homebuilder reported stronger profit and revenue for the spring than analysts expected. Other homebuilders also rallied, including a 2.6% climb for Lennar and a 2.7% rise for PulteGroup.
In stock markets abroad, European indexes were mixed after the European Central Bank held its main interest rate steady. Asian indexes were also mixed.
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AP Business Writers Yuri Kageyama and Matt Ott contributed.
