Stocks declined sharply on Tuesday, with the Dow Jones Industrial Average falling over 100 points as the first trading day of September began on a volatile note. The S&P 500 slid 0.7%, while the tech-heavy Nasdaq Composite dropped 0.9%. The market’s downward momentum was led by significant losses in semiconductor stocks, particularly Nvidia, which fell over 4%. Nvidia, often viewed as a barometer for the artificial intelligence sector, led the decline among chipmakers, including Micron, KLA, and Advanced Micro Devices. The VanEck Semiconductor ETF, which tracks the sector, dropped more than 3%, contributing to the overall market slide.
Tuesday’s downturn came after a strong but unpredictable August, during which all three major indexes posted gains. Despite the positive performance, concerns lingered over the possibility of a U.S. recession and the unwinding of a popular hedge fund trade involving the Japanese yen, both of which pressured markets earlier in the month. Analysts are cautious as September traditionally poses challenges for the stock market. Deutsche Bank’s macro strategist Henry Allen noted that August began on a rough note but was later buoyed by encouraging economic data that eased recession fears.
Investors are now awaiting the U.S. government’s August jobs report, due on Friday, which could offer further insights into the economy’s health. The resumption of trading after the Labor Day holiday also saw Berkshire Hathaway making headlines as Warren Buffett’s conglomerate continued to reduce its holdings in Bank of America. The company sold $6 billion worth of shares over three sessions, marking its sixth consecutive day of selling. Market participants are also bracing for other economic indicators this week, including U.S. manufacturing data.
The anticipation of these reports, combined with the historical challenges September poses for equities, has many traders preparing for heightened volatility. In currency markets, the Japanese yen gained 0.5% against the dollar as Bank of Japan Governor Kazuo Ueda reiterated the central bank’s commitment to tightening monetary policy if economic conditions allow. Meanwhile, the dollar strengthened for the fifth straight day, its longest winning streak since mid-April.