Tech companies led stocks lower on Wall Street on Wednesday, ending a four-day winning streak for the market, after an economic report stoked concerns about the health of the economy.
The S&P 500 fell 0.6% after losing nearly 1.1% at one point. The Dow Jones Industrial Average slid 0.2%, almost fully recovering from a 0.7% loss. The pullback was the indices’ first close lower in five days. The tech-heavy Nasdaq composite fell 1.2%.
New data from the Commerce Department on Wednesday showed the U.S. economy grew at an annual rate of 6.9% from October through December, slower than previous estimates and below economists’ expectations.
The data, which came amid a rebound in stocks over the past two weeks, may have led investors to claw back some recent gains, said Sam Stovall, chief investment strategist, CFRA.
“The GDP numbers were weaker than we expected,” Stovall said. “It looks like we are in the throes of a period of weakness in the first quarter.”
The S&P 500 fell 29.15 points to 4,602.45. The Dow slipped 65.38 points to 35,228.81. The Nasdaq lost 177.36 points to 14,442.27.
In a reversal from the previous day, shares of smaller companies fell more than the market as a whole. The Russell 2000 Index slipped 42.03 points, or 2%, to 2,091.07.
Markets have mostly gained ground this week as talks between Russia and Ukraine appear to be progressing and following encouraging data on consumer confidence.
Negotiations between Russia and Ukraine remain uncertain, however, and Russian bombardments in areas where they said they would dampen tempered optimism about the prospects for resolving the conflict.
Tech stocks were among the largest weightings in the broader market. Many companies in the sector have high values which tend to have an outsized effect on the evolution of stock indices. Chipmaker Nvidia fell 3.4%. Retailers also fell. Home Depot slipped 2.9%.
Oil prices, volatile since Russia’s invasion of Ukraine in February, gained ground. U.S. benchmark crude oil rose 3.4% and Brent crude, the international standard, rose 2.9%. Energy stocks gained ground as oil prices rose. Phillips 66 rose 4.8%.
Bond yields fell. The yield on the 10-year Treasury note, which influences interest rates on mortgages and other consumer loans, slipped to 2.35% from 2.40% on Tuesday evening.
Bond yields have mostly risen this year as Wall Street braces for a policy shift from the Federal Reserve. The central bank, along with its global counterparts, is raising benchmark interest rates to help tackle persistently rising inflation.
Wall Street is also watching the bond market closely for clues about the economy’s trajectory. On Tuesday, the 10-year Treasury yield briefly fell below the 2-year Treasury yield, in what Wall Street calls an “inversion” of the Treasury yield curve. Investors are taking note as prolonged yield reversals have accurately predicted previous US recessions. The 2-year Treasury yield fell to 2.33% from 2.35% on Tuesday night.
Investors have several other economic updates to review this week. On Thursday, the Commerce Department will release its Personal Income and Spending report for February and the Labor Department will release its March jobs report on Friday.
Wall Street is also gearing up for the latest round of corporate report cards as the quarter draws to a close. Several companies have already released financial results and updates.
Sportswear maker Lululemon jumped 9.6% after announcing encouraging financial results for its latest quarter and giving strong sales guidance. Online pet store Chewy fell 16.1% after reporting a bigger fiscal fourth-quarter loss than analysts expected.