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Stocks can only go up. Until they don’t. Nasdaq (Ingredients: IND) had its worst day of 2024 on Wednesday as the tech-heavy index Slip more than 3% For the first time in more than 400 trading days. plummet Hundreds of billions of dollars have been wiped off the market value of the Big Seven amid widespread concerns about the profits of big technology companies, which have driven the broader market to record highs. A turn around Investment sentiment has also been weighed on in recent weeks, while other concerns have focused on the broader economy.
Snapshot: The most immediate catalysts for the sell-off were a tepid earnings report from Alphabet (GOOG) (GOOGL) and a disappointing earnings call from tech darling Tesla (TSLA). Alarmed investors temporarily changed the tone of its commitment to artificial intelligence, with Google not reporting any revolutionary profits from its new suite of products and Musk continuing to push forward with his robotaxi vision. Artificial intelligence trading has helped support the rally since late 2022, but investors are increasingly demanding that huge investments in the technology pay off, or at least materially see returns nearly two years after ChatGPT launched.
Technology isn’t the only industry experiencing a crisis of confidence as earnings season gets underway (see electric vehicles and commercial real estate). From a macro level, wage growth and the labor market are cooling, with the unemployment rate recently rising to 4.1% from 3.4% a year ago. U.S. GDP growth data will be released later on Thursday, while the Fed’s favorite inflation gauge will be released on Friday, providing more clues about the future of monetary policy and interest rate conditions (the next FOMC meeting will to be held next week).
In the comments: SA analyst Damir Tokic wrote: “Is this just a random dip, or the start of a deeper correction? For most investors, it really doesn’t matter as long as the bull market eventually resumes.” Technically, the S&P 500 is in slightly lower territory. What happens next depends on fundamentals. We’ll have to wait for Nvidia (NVDA) to see the bubble burst in late August. Earnings to determine whether we are in the process of bursting the artificial intelligence bubble.
