Dow Jones up, Nasdaq down: stocks under pressure from IT sector and weak labor market

The main U.S. stock indices began trading in mixed direction on February 4 after a sharp decline a day earlier, caused by the redistribution of capital from technology stocks to more protective securities. Also investors on Wednesday were reacting to new data on the labor market, CNBC writes.

- The technology index Nasdaq Composite was losing more than 1% at the moment. Immediately after the opening of the exchange, the index was declining by about 0.5%, but then the decline accelerated.

- The S&P 500 index initially gained about 0.15%, but then lost the gained and began to decline - at the moment by more than 0.3%.

- The Dow Jones Industrial Average held in the green and was up about 0.5%, but its gains were trimmed to 0.1% at moments.

- The Russell 2000 index of small-capitalization companies was adding 0.3%.

- The Cboe VIX Volatility Index, also called the Wall Street Fear Index, was up 3% at around 18.5 points. The level of 20 is considered psychologically important.

- Gold gained about 2.9% during the day, rising back above $5000 per troy ounce. But then the price fell back below this mark.

- Spot silver prices were up 8% at above $92.

Investors continued to reduce positions in technology stocks and evaluated the latest data on the labor market, according to CNBC. The Dow Jones was able to stay in the plus thanks to strong quarterly results of pharmaceutical giant Eli Lilly and Super Micro Computer, according to Reuters. The index of shares of software and services developers, declined for the sixth consecutive session, losing 13% during this time: this is the sharpest such decline since March 2020, the agency says.

"Trading on generative AI is no longer a one-way traffic. We've moved from a 'buy everything' approach to a 'not everyone will win' approach. I believe AI is losing its ability to pull the entire market, but fortunately investors are still finding alternatives to invest in - including other segments of the S&P 500, small- and mid-cap companies and certainly international equities," said Peter Boockvar, chief investment officer at One Point BFG Wealth Partners, as quoted by CNBC.

ADP reported that private-sector jobs rose by only 22,000 in January, half as many as economists had forecast, according to Dow Jones data, the TV station noted. Typically, the ADP report precedes the release of Bureau of Labor Statistics data on nonfarm payroll employment, but there won't be any this week because of the partial government shutdown. The shutdown, which began Saturday, Jan. 31, officially ended Feb. 3 after President Donald Trump signed legislation to fund the government.

The Nasdaq Composite Index fell 1.4% on Tuesday, February 4, as investors reallocated capital from technology stocks to securities that are more linked to the improving economy. The main pressure came from those players that traders considered vulnerable to the widespread adoption of artificial intelligence: mainly software developers, Bloomberg noted.

The broad market was also pulled by companies in the data services segment, which fell in price after AI startup Anthropic unveiled an automation tool for lawyers. Risks to the industry have been building for months, and recent releases by Anthropic and Google have sharply heightened fears of disruptive change for traditional software vendors.

This article was AI-translated and verified by a human editor