Monday’s global stock market rout ravaged the share prices of the mega American technology companies which buoyed the last two years’ boom times, as equities on pace for their sharpest decline since the beginning of the COVID-19 pandemic.
Monday is a brutal day for long investors.
American stock index futures tanked by about 8:45 a.m. EDT in limited premarket trading Monday, as the blue chip Dow Jones Industrial Average’s 3% decline set it up for its worst loss since September 2022, the S&P 500’s almost 5% drop paced it for its most painful day since June 2020 and the tech-heavy Nasdaq Composite’s 6% dive set it on track for its starkest decline since March 2020.
Hit the hardest were shares of the growth-focused “magnificent seven” tech companies as investors braced for the possibility of a sharp economic slowdown.
Apple shares are on pace to open down 10%, Microsoft 6%, Nvidia 15%, Google parent Alphabet 7%, Amazon 9%, Facebook parent Meta 10% and Tesla 10%.
The septet, which accounted for about a third of the entire market capitalization-weighted S&P at Friday’s market close, is on pace to lose a combined $1.4 trillion in market value when trading opens at 9:30 a.m.
On pace for their worst respective daily percentage drops since March 2020, Apple and Nvidia stocks were the biggest fallers in terms of market value, as Apple heads toward a roughly $320 billion loss and Nvidia a $380 billion loss.
All of the magnificent seven are now in a 10% correction or worse, led by Amazon’s 24% expected fall from its July 2 record closing high and Nvidia’s 32% unraveling from its June 18 high.
The brutal selloff is a combination of several factors coming together into one fireball stoking investor fear. Domestically, the major drivers are lingering concerns from the last few weeks’ big tech earnings calls about higher artificial intelligence-related expenses and less clear related profits, Friday’s jobs report which revealed a far weaker labor market than expected, causing sharp stock losses. Apple stock was also weighed down by Berkshire Hathaway disclosing Saturday it cut its massive stake in the iPhone maker in half, while Nvidia shares slumped amid reports of delays in its generative AI semiconductor chips. Overseas, concerns about the impact of Japan’s increasing its near-zero borrowing costs on “carry trades” caused Japan’s Nikkei stock index to register its worst day since 1987.
The sudden decline is chilling for investors, but it’s not new for the often rocky stock market. Even if the S&P holds its 4% loss at open, it would still be up 8% year-to-date.