Stocks tried to claw back some gains on Wednesday, but the morning’s gains fizzled out as Nvidia and other big tech stocks sold off in the afternoon. Nvidia’s stock price closed down 5.1% that day, and Tesla’s stock price fell 4.4%. Meta Platforms fell about 1.1% and Microsoft fell 0.3%. All told, the tech-heavy Nasdaq closed down 1.1% at 16,195.81. The Dow Jones Industrial Average and S&P 500 also ended the day lower. Morgan Stanley says this week’s sharp sell-off in market-dominated technology leaders could be a buying opportunity if the U.S. can emerge from recession. After the share price retreated on Monday, analyst Erik Woodring said the group’s valuation was 30% below its five-year historical high and 50% above its low over the same period, in line with the average. However, after adjusting for future earnings per share growth, the shares trade at a 40% discount. “As a result, we conclude that while Mag 7’s valuation remains subject to significant valuation downside risk in the event of a black swan or recession, it remains stable relative to future growth following the recent decline,” he wrote. Looking ahead, Mag 7’s current valuation is attractive. As of Wednesday’s close, the group was down an average of about 8.6% since the beginning of the month, underperforming the S&P 500 and the Nasdaq, which have seen investors flee the market in recent weeks. In industry, the sell-off accelerated on Monday after Friday’s weak July jobs report and the unwinding of the yen “carry trade”. Artificial intelligence darling Nvidia’s current stock price is down 37% from its historical closing high, while the Nasdaq index, which is dominated by technology stocks, is down 15%.
