Stock Market Today: Dow Drops 404 Points Ahead of Powell's Testimony

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Stocks opened in negative territory Tuesday and stayed there through the close. Another down day for mega-cap tech giant Apple (AAPL) created headwinds for the main indexes, as did anxiety ahead of Federal Reserve Chair Jerome Powell's two-day congressional testimony and Friday's jobs report.

At the close, the Dow Jones Industrial Average was down 1% at 38,585, the S&P 500 was 1% lower at 5,078, and the Nasdaq Composite was off 1.7% at 15,939.

Apple stock lost another 2.8% Tuesday, bringing its year-to-date loss to 11.6%. Today's slide came after a report from Counterpoint Research indicated Chinese smartphone sales were down 7% year-over-year through the first six weeks of 2024.

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Sales for Apple's iPhones, specifically, were 24% lower than the year prior amid "stiff competition at the high end from a resurgent Huawei," as well as "aggressive pricing from the likes of OPPO, vivo and Xiaomi," said Mengmeng Zhang, senior analyst at Counterpoint Research, in the press release. China accounted for more than 17% of Apple's total revenue in its December quarter.

Here at home, Apple is facing a potential class-action lawsuit over its iCloud storage service.

Target has its best day of the year after earnings

In other single-stock news, Target (TGT) shot up 12% – marking its best day since November 15 when it surged 17.8% – after the discount retailer reported earnings. In its fourth quarter, TGT disclosed higher-than-expected earnings of $2.98 per share on $31.9 billion in revenue. Additionally, its operating income margin was 5.8% vs 3.7% in Q4 2022.

Still, Christina Hennington, chief growth officer at Target, warned in the company's earnings call that there are "stubborn pressures impacting families and retailers." Consumers, Hennington adds, are feeling "stretched" and are "having to make trade-offs to meet their needs of their families, while sprinkling in the occasional luxury."

Powell testimony, jobs data on deck

Meanwhile, investors are looking ahead to Powell's appearance on Capitol Hill, with the Fed chief set to testify Wednesday morning in front of the House Financial Services Committee. On Thursday, he'll appear before the Senate Banking Committee.

And on Friday, the February jobs report is due out. Bill Adams, chief economist for Comerica Bank, thinks one release on today's economic calendar hints at a "giveback in the February jobs report" vs January's strong reading of 353,000 new jobs added.

Specifically, Adams says a decline in the employment component of the Institute for Supply Management's (ISM) services sector Purchasing Managers Index (PMI), to 48.0 in February from January's 50.5, indicates "a majority of surveyed firms trimmed headcount" last month. Comerica anticipates Friday's payrolls report will show 180,000 new jobs added in February. Economists' average forecast calls for the creation of 200,000 jobs last month.

As for today's headline services PMI, it fell to 52.6% in February from January's 53.4%. In other words, while economic activity in the services sector expanded last month, it did so at a slower pace than what was seen at the start of the year.

Separate data from the Census Bureau released today showed factory orders were down 3.6% month-over-month in January.

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With over a decade of experience writing about the stock market, Karee Venema is the senior investing editor at Kiplinger.com. She joined the publication in April 2021 after 10 years of working as an investing writer and columnist at a local investment research firm. In her previous role, Karee focused primarily on options trading, as well as technical, fundamental and sentiment analysis.