NASDAQ posted the highest decline among three major Wall Street indexes in Tuesday's trading session following losses in mega-cap stocks.
NASDAQ closed at 10,353.23, losing 144.64 points or 1.38 percent. The S&P 500 — which compiles shares of the 500 largest companies in the U.S. — concluded the trading session at 3,829.25, falling by 15.57 points.
The Dow Jones was the only major index trading in the green last session, closing at 33,241.56, gaining 37.63 points or 0.11 percent.
Significant declines in mega-cap stocks held NASDAQ down. Apple fell 1.39 percent to 130.03, Alphabet dropped by 2.09 percent to close at 87.93 and Amazon declined 2.59 percent and traded at 83.04 during closing. This year, Amazon lost half of its value.
The biggest weight was Tesla, which fell 11.41 percent to 109.10 and hit its lowest level in more than two years. The drop followed reports that the electric car maker aims to reduce the production schedule at its Shanghai plant entering 2023. As a result, Tesla stock has lost two-thirds of its value throughout 2022.
For the S&P index, the consumer and technology sectors were the worst performers on Tuesday. For example, Southwest Airlines in the S&P lost 4.9 percent of its share value after it canceled thousands of flights due to heavy winter storms across the U.S.
Meanwhile, for the Dow Jones, sectors linked to the economy — including materials and energy — helped the index close higher.
Chinese company shares — including Alibaba Group Holding and JD.Com — rose between 2.0 to 3.8 percent following the Chinese government's announcement that travelers are no longer required to quarantine per January 8. Analysts speculated that this move shows the Xi administration's plan to reopen the economy despite the surge of COVID-19 cases in China cities.
Cherry Lane Investments partner Rick Meckler said there was polarization in investor action and thin trading volumes, leading to mixed results on the stock market.
"What you're seeing is a battle between investors who are doing year-end tax selling and investors that believe that normal inflows in January will lead to a better market," Meckler said.
This year, growth stocks are under pressure from the increase in the U.S. Treasury yields since the Federal Reserve decided to tighten its monetary policy to combat inflation.
In December alone, the NASDAQ and S&P 500 lost 9 percent and 5.7 percent of their values, respectively. Both indexes are currently on track to post their most significant annual losses since the financial crisis in 2008.
Starting in March, the central bank has consecutively raised interest rates, with the latest increase putting the benchmark rates at a 4.25 to 4.5 percent range. Although the current benchmark rate is already the highest in decades, Fed officials said they would likely escalate it further next year.
The U.S. dollar posted growth in the following session, with the index gaining 0.038 percent. The yen also dropped by 0.4 percent to trade at 134 per dollar.
Stock market outside the U.S.
The global stock market outside of the U.S. traded sideways after Wall Street closed. MSCI's global stock index — which tracks stocks in various economies — traded flat. The index is on track to lose 19.5 percent this year, its worst-performing year since 2008. STOXX 600 in Europe was also on a flatline and on track for an annual loss.
SSE Composite in mainland China closed 0.4 percent lower, while the Hong Kong stock market posted a 1.6 percent increase. Analysts have said that in the coming months, China's stock market will start a "cyclical upturn" following higher mobility.