Big technology stocks sank Tuesday, a potentially worrisome omen as the darlings of 2023’s explosive gains lost hundreds of billions of dollars of market value.
A trader works the floor of the New York Stock Exchange on Tuesday, the first trading session of ... [+]
The tech-heavy Nasdaq Composite fell more than 2% by late afternoon in the opening trading session of the year, a far wider loss than the Dow Jones Industrial Average’s 0.2% dip and S&P 500’s 0.9% fall.
Should losses hold, Tuesday will be the Nasdaq’s worst day since October 25 and its lowest closing price since mid-December.
Driving much of the tech slump was a 4% drop by Apple’s stock, a dive precipitated by an analyst downgrade questioning why the $2.9 trillion (market capitalization) company is trading at such an expensive valuation considering its negative earnings and profit growth.
Other members of the “magnificent seven” tech stocks, which gained a collective $5.1 trillion in market cap last year, also flailed Tuesday.
Alphabet, Amazon, Meta, Microsoft, Nvidia and Meta each fell 1.6% or more, while Tesla was the sole magnificent seven member in the green, as its shares slipped less than 1% after reporting more fourth-quarter electric vehicle deliveries than forecasted.
About $330 billion. That’s how much market value the magnificent seven lost Tuesday.
The Nasdaq rose more than 40% in 2023, erasing most of 2022’s historic losses and easily outperforming the Dow and S&P’s respective returns. Much of tech’s gains were due to investor optimism about the longer-term profitability for breakthroughs in generative artificial intelligence, rather than a corresponding uptick in earnings, leading to concerns about the health of the rally.
Microsoft is now just $100 billion behind Apple for the title of the world’s most valuable company, a mantle held by Apple since late 2021.