Tech stocks have continued to drag down Wall Street as another losing week comes to a close. This week saw the worst performance for big tech stocks since the COVID crash of 2020, leaving investors on edge.
The S&P 500 index fell by 0.9%, marking its third consecutive week of decline. This downturn has been the longest streak since September, representing a stark contrast to the record-breaking run earlier this year. The Nasdaq Composite Index took an even bigger hit, dropping by 2%, while the Dow Jones industrial average managed to rise by 0.6%.
Among the notable losers were some of the market’s previously high-flying tech stocks. Super Micro Computer saw a significant decline of 23.1%, despite having surged by nearly 227% over the past year. Similarly, Nvidia, known for its AI technology, fell by 10%, emerging as the biggest weight in the S&P 500 due to its large size.
The tech sector as a whole experienced a 7.3% loss this week, its worst performance since March 2020. This decline was fueled by discouraging trends from global giants like ASML, a Dutch semiconductor supplier, which reported lower-than-expected orders.
Investors were also spooked by the Federal Reserve’s indication that interest rates may remain high for longer than expected. Fed officials hinted at the possibility of fewer rate cuts than initially anticipated, which has rattled the markets. Concerns about inflation persist, with the Fed waiting for more evidence before considering lowering interest rates.
As a result of these developments, companies are under pressure to deliver strong earnings growth. Recent price declines have somewhat alleviated concerns about overvaluation, but the tech sector remains vulnerable due to high rates and slow progress on inflation. Amidst all this, individual companies such as Netflix and American Express have reported mixed results, further contributing to market volatility.
Looking ahead, investors are bracing for continued uncertainty as they navigate a challenging economic landscape. The week’s events underscore the importance of staying informed and adaptable in a rapidly changing market environment.
