Nasdaq dives to 12-week low to extend losing run, Dow opens higher

9.58am: Nasdaq dives at the open

It’s a mixed start for US stocks, with big tech in the red again. 

The Nasdaq has opened 1.2% lower to 22,293.85, the lowest since 21 November and on track for what could be a potential sixth weekly reverse in a row. The S&P 500 has dropped 0.7%. 

Strategy, CrowdStrike, Applovin, Palo Alto, AMD, Tesla and Micron are among the notable Nasdaq fallers, with Alphabet, Microsoft and Amazon also in the red.   

Going the other way, the Dow Jones has opened 0.2% higher, lifted by Apple, Travelers Co, Goldman Sachs and American Express.

7.45am: Nasdaq set to open lower after five-week decline

US stock futures were in the red on Tuesday, with Wall Street reopening after the long weekend with investors still grappling with the recent pullback in technology shares.

Losses are expected to be led by the tech-heavy Nasdaq, where futures were down 0.8%, the S&P 500 down 0.4% and Dow Jones down 0.2%.

This weakness has followed a fortnight of losses for the S&P 500, with last week seeing a decline of 1.4%, while the Nasdaq dropped over 2% and the Dow retreated 0.9% from highs early in the month.

AI-related disruption fears have been weighing on sentiment across multiple sectors, said market analyst David Morrison at Trade Nation, leading to the Nasdaq enduring its fifth straight weekly decline – its longest losing streak since 2022

“Overall, there has been a decline in upside momentum across the US majors since the beginning of this month. Many big tech and certain AI-related stocks have taken a hit as investors continue to question the likely return on investment,” Morrison added. 

“The spending commitments are so large that many cash-rich corporations have halted share buybacks. Some have issued more stock, and others have turned to debt markets to raise funds for AI investment.

“Meanwhile, software companies have come under scrutiny as investors question their business models given growing competition from AI.” 

He adds that investors “appear wary of adding to their exposure at current levels. They seem to be sitting on their hands and waiting for a catalyst which will either provide a reason to sell or be”.

Aarin Chiekrie, analyst at Hargreaves Lansdown, noted that the US software and services sector is now trading at a discount to the broader sector for just the second time in 30 years.

“For investors willing to stomach some near-term volatility, this looks to be a great time to dive into the market and pick up some software bargains.”

On the earnings front, Palo Alto Networks reports after the bell, with DoorDash, Walmart, and Wayfair due later in the week.

Traders’ attention will also turn to the Federal Reserve meeting minutes on Wednesday and Friday’s core PCE inflation update.