On Thursday, tech stocks faced continued pressure, extending a sell-off that intensified following the Nasdaq Composite’s worst performance since 2022. The tech-heavy index (^IXIC) declined by over 0.7%, while the broader market also saw losses with the S&P 500 (^GSPC) slipping approximately 0.8%. The Dow Jones Industrial Average (^DJI) experienced a notable retreat of more than 1%, shedding nearly 550 points after reaching a record high in the previous session.
Simultaneously, the Russell 2000 index of small-cap stocks (^RUT), which had recently enjoyed substantial gains, plummeted by close to 2% during the day.
This week, Wall Street’s rally encountered increased volatility amidst concerns over political, geopolitical, and trade uncertainties. These factors have injected uncertainty into a market that had previously been optimistic about potential interest rate cuts by the Federal Reserve this year.
Supporting expectations of lower interest rates, a report showing a cooling labor market emerged on Thursday. Continuing claims for unemployment benefits rose to their highest level since November 2021, reinforcing speculation about the Fed’s dovish stance.
Thursday’s decline in tech stocks on the Nasdaq followed a 2.7% drop in the previous session, partially attributed to fears of heightened US restrictions on exports to China. Leading tech stocks such as Nvidia (NVDA), TSMC, and ASML (ASML) suffered significant losses as investors rotated away from high-profile tech names towards other sectors.
Amidst the tech downturn, TSMC briefly lifted sentiment with strong quarterly earnings, reporting a 36% increase in profit and raising its sales forecast for 2024, signaling confidence in the ongoing AI-driven expansion.
In addition to economic factors, market participants are closely monitoring developments in the US presidential race, where the health of President Joe Biden and political maneuvering are influencing investor sentiment.
Post-market, Netflix (NFLX) reported second-quarter earnings that surpassed expectations. However, the streaming giant’s stock slipped approximately 2% in after-hours trading as it missed revenue projections for the current quarter.
The persistent turbulence in tech stocks underscores broader market unease, as investors navigate a landscape fraught with economic uncertainties and shifting geopolitical dynamics.
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