Nasdaq Has Worst Day Since 2022 as Tech Stocks Get Slammed
The Nasdaq Composite index experienced its sharpest downturn since December 2022 as tech stocks faced significant selling pressure, marking a stark contrast to the Dow’s continued rise to record highs.
On Wednesday, the Nasdaq plummeted by 2.8%, reflecting investor retreat from major tech giants that had driven Wall Street’s impressive rally earlier this year. Concurrently, the S&P 500 also saw a decline of 1.4%.
In contrast, the Dow Jones Industrial Average bucked the trend, climbing 0.6% to achieve another record high, surpassing the 41,000 mark for the first time. This milestone came exactly two months after the Dow first closed above 40,000.
Leading the tech sector’s downturn, Nvidia saw its shares drop by 6.6%, while rival chipmaker Advanced Micro Devices (AMD) experienced a steep decline of 10.2%.
The selloff was exacerbated by reports that the Biden administration is considering imposing additional sanctions on Chinese tech firms and tightening semiconductor trade restrictions between the US and China, as reported by Bloomberg on Tuesday. The US Commerce Department declined to comment on these developments.
Investor sentiment was further influenced by recent economic indicators, including a subdued inflation report and stronger-than-expected retail sales data, which have bolstered expectations for a potential interest rate cut in September. Consequently, investors pivoted towards value stocks, which typically perform better in a low-interest-rate environment.
While the Russell 2000 index, which tracks small-cap stocks, initially fell during midday trading on Wednesday, it still managed to maintain a 4.5% gain for the week.
Among the prominent tech giants affected, the so-called Magnificent Seven stocks, which have been pivotal in driving market gains this year amid the artificial intelligence boom, saw significant declines. Microsoft shares fell 1.3%, Apple slid 2.5%, Amazon declined 2.6%, Alphabet dropped 1.6%, Tesla slipped 3.1%, and Meta Platforms saw a notable 5.7% decrease in its share price.
