Nasdaq declines over 3% as semiconductor stocks fall ahead of key jobs data

The Nasdaq index tumbled more than 3% on Tuesday, driven by a sharp retreat in semiconductor stocks, including Nvidia, as investors braced for crucial jobs data later in the week.

The tech-heavy Nasdaq closed at 17,136.30, down 3.3% in the first trading session of September after Monday’s holiday. The Dow Jones Industrial Average also declined, falling 1.5% to 40,936.93, while the broader S&P 500 lost 2.1% to close at 5,528.93.

Stocks remained in negative territory throughout the session, erasing a portion of the gains accumulated over the past month. Market analysts attributed the downturn to profit-taking and rebalancing activities as the earnings season drew to a close.

“I think there’s just profit taking, kind of rebalancing going on there,” said Sam Burns, chief strategist at Mill Street Research. “And now that earnings season is over, there’s much less in terms of corporate news to drive things.”

The Institute for Supply Management (ISM) reported that its manufacturing index for August was 47.2%, a slight increase from the previous month but still below the 50-point threshold that separates expansion from contraction. ISM officials noted that demand remained weak, marking the fifth consecutive month of contraction.

The stock market’s losses come ahead of significant employment data expected later in the week, which could influence future U.S. monetary policy decisions. The previous jobs report triggered a brief but intense sell-off in U.S. equities, raising concerns about a potential recession before subsequent economic reports restored some confidence.

Art Hogan, chief market strategist at B. Riley Wealth, warned that another weak jobs report could present a “significant headwind.”

“Then you have two in a row and you start to be concerned about the future of the economy and jobs,” Hogan said.

Semiconductor stocks were among the hardest hit, with Nvidia, Advanced Micro Devices, and Intel all dropping by around 8% or more. Boeing also faced significant losses, shedding 7.3% after a downgrade by Wells Fargo.

Despite the overall market decline, a few Dow companies, including Coca-Cola, Visa, and Procter & Gamble, managed to defy the trend and post gains.