Tech Stocks Suffer Steepest Weekly Plunge Since 2022 Amid Anticipation of Key Earnings
The stock market witnessed a significant downturn this week, led by a selloff in major technology firms ahead of crucial earnings announcements. The ‘Magnificent Seven’—a cohort of tech megacaps including Apple ( $AAPL), Microsoft ( $MSFT), Alphabet ( $GOOG), Amazon ( $AMZN), Nvidia ( $NVDA), Meta Platforms ( $META), and Tesla ( $TSLA)—saw substantial declines. This group, which has been pivotal in driving the bull market, is now under intense scrutiny as investors eagerly await their financial results due next week.
The S&P 500 broke below the 5,000 mark, and the Nasdaq 100 tumbled over 2%, marking its biggest drop of the year. The spotlight was particularly harsh on Nvidia, ( $NVDA), which saw a 10% decline, erasing over $200 billion in market value. Similarly, Super Micro Computer ( $SMCI) experienced a significant drop after announcing the date for its third-quarter results without providing a preview, which heightened investor anxiety.
These declines reflect broader market sentiments influenced by a mix of economic indicators and corporate financial health. According to Bloomberg Intelligence, the top seven growth companies are expected to report a 38% increase in profits for the first quarter. However, excluding these tech giants, the rest of the S&P 500 is projected to see a profit decrease of 3.9%.
This week’s performance has extended the S&P 500’s losing streak to six consecutive drops—the longest since October 2022. The steep declines contrast sharply with the index’s strong start to the year, which saw a 10% gain in the first quarter, the best since 2019. Despite the robust start, the recent pullback reflects growing skepticism among investors about the sustainability of the market’s rally amidst ongoing economic strength.
The downturn in tech stocks was further compounded by global economic tensions and sector-specific issues. Taiwan Semiconductor Manufacturing Co. ( $TSM) and ASML Holding NV ( $ASML) both signaled a cooling chip market, raising concerns about what might be revealed in upcoming earnings reports from other tech giants.
Adding to the market’s woes were geopolitical tensions and economic policies. Treasury yields showed slight fluctuations, and oil prices adjusted after initial spikes following developments in the Middle East. The week also saw heightened attention to corporate developments outside the tech sector. For example, Nordstrom’s ( $JNW) founding family expressed interest in taking the company private, and Procter & Gamble ( $PG) reported sales below Wall Street forecasts, although it raised its profit outlook.
As Wall Street braces for the next round of earnings reports, the performance of these tech giants will be critical in determining market direction in the coming weeks. The results will not only reflect the health of the tech sector but also signal potential shifts in market dynamics amid broader economic and geopolitical challenges.
