Tech Giants Lead a Dip in US Stock Market After Recent Surge

After a recent surge, the US stock market took a hit, led by a decline in tech giants amidst mixed economic signals ahead of Jerome Powell’s Congressional testimony. Apple, Advanced Micro Devices, and Tesla saw notable slides due to various challenges, contributing to a broader market downturn worried about high valuations among leading tech companies.

Citi’s Chris Montagu highlighted that bullish sentiment towards US tech stocks is at its highest in three years, indicating potential for a market pullback. The Nasdaq 100 futures show particularly stretched long positions. This comes as the US service sector shows signs of cooling in February, despite a rise in orders and business activity, adding to market caution.

The S&P 500 and the Nasdaq 100 both experienced declines, with treasury yields also dropping. Market enthusiasm had pushed Bitcoin and gold to record highs, driven in part by a rally in major tech firms, dubbed the ‘Magnificent Seven,’ spurred by AI excitement. However, current valuations, earnings trends, and market sentiment suggest that fears of a new tech bubble might be overstated, with major tech equities trading at significantly lower multiples compared to the peak of the dot-com bubble.

In corporate news, Target’s Q4 earnings exceeded expectations, showcasing improved inventory management. Meanwhile, Nio Inc. reported an increased annual loss amid intense competition in the EV market, and Novo Nordisk’s new data on Ozempic showed less impact on kidney disease than anticipated. Bayer AG predicts a continued profit decline while addressing its legal challenges without altering its conglomerate structure.