S&P 500 Struggles for Direction as Tech Continues Stumble

© Reuters

By Yasin Ebrahim

Investing.com -- The S&P 500 swung between gains and losses Thursday, and remained close to bear-market territory as stocks struggled to find their footing following the biggest one-day selloff since 2020 a day earlier.

The S&P 500 fell 0.3% to trade about 18% below its recent peak, just shy of the 20% bear market level. The Dow Jones Industrial Average slipped 0.5%, or 170 points, and the Nasdaq gained 0.3%.

Technology stocks, which were briefly in the green, came under fire as expectations for aggressive Federal Reserve rate hikes continued to weigh on investor sentiment.

Apple (NASDAQ:AAPL), led the decline in big tech, down more than 1%, even as some on Wall Street reassessed their outlook on iPhone demand.

Bank of America raised its estimates on iPhone sales to 237 million units from 231 million for Apple's 2023 fiscal year, after conceding that prior iPhone estimates may have been “too conservative.”

Cisco (NASDAQ:CSCO) was also a big drag on the market, plunging more than 14% after the network company reported quarterly results and guidance that fell short of Wall Street estimates owing to the impact of China lockdowns.

“Although the lockdown is expected to be lifted on June 1, it remains uncertain if improvements can be seen in the short term considering ports and airports are expected to be congested as nearly all manufacturers will compete for the capacity to get their products shipped,” Credit Suisse said in a note.

Harley-Davidson (NYSE:HOG) reversed about 9% after suspending most vehicle assembly and shipment for two weeks after a supplier was caught up in a regulatory compliance matter.

Utilities and consumer staples, defensive corners of the market, also pushed the broader market lower, with the latter pressured by losses in Clorox (NYSE:CLX), Philip Morris International Inc (NYSE:PM) and Molson Coors Brewing (NYSE:TAP).

Consumer discretionary stocks, however, shrugged off the broader market malaise as travel related stocks including Expedia (NASDAQ:EXPE), Caesars Entertainment  (NASDAQ:CZR) and Booking Holdings (NASDAQ:BKNG) rallied as investors looked ahead to rebound in travel demand, particularly in China, where lockdown measures were eased.

Tesla (NASDAQ:TSLA) also underpinned gains for consumer discretionary stocks despite Wedbush cutting its price on the stock, forecasting a China-led dip in deliveries for the second quarter.

Wedbush cut its price target on Tesla to $1,000 from $1,400, pointing to the Shanghai lockdowns, which have been an “epic disaster” and are expected to modestly impact delivery in the second quarter, the research firm said.

The economy front did little to soften fears of slowing economic growth ahead after jobless claims increased by more than expected, while the Philly Fed index showed a sharp downturn in manufacturing activity.

In other news, Under Armour (NYSE:UAA) fell about 11% after the apparel retailer unexpectedly announced that chief executive Patrik Frisk would be stepping down on June 1.