Stocks Struggle Tuesday with Nasdaq Dropping 0.8%
Stocks are falling this week as AI disruption fears affect the market in a number of sectors and inflation data has little effect.
Quick overview
- The stock market experienced muted bearish movement last week, with tech stocks suffering the most.
- The Nasdaq fell 0.8%, while the Dow and S&P 500 decreased by 0.2% and 0.4%, respectively.
- Concerns over AI disruption have negatively impacted various industries, particularly technology, leading to consecutive weeks of losses for major stock indices.
- Despite strong quarterly earnings, high capital expenditures in the AI sector continue to worry investors.
As inflation data poured in last week, the stock market responded with muted, slightly bearish movement, and tech stocks were hit the hardest.
The Nasdaq dipped 0.8% on Tuesday while the Dow fell 0.2% and the S&P 500 decreased by 0.4% as the shortened trading week began. The market was closed on Monday for President’s Day, and tech stocks found particular trouble in making gains as trading began and inflation data was processed.
The week started off poorly, and it looks like Wall Street is in for another bearish turn for the third week of February trading. Notable tech stocks that fell this week are Palantir Technologies (PLTR), which fell more than 2%, as well as Nvidia (NVDA) and Meta Platforms (META)- both down close to 1%. Advanced Micro Devices (AMD) is also down 2% for Tuesday
Consecutive Weeks of Losses for Stock Indices
Despite a strong start in January, the stock market has lagged in February, and the Nasdaq has now fallen five weeks in a row. The S&P 500 and Dow Jones fared slightly better, with four weeks of losses out of the last five. Many of the biggest losers during this bearish cycle have been technology stocks, particularly those associated with the AI industry.
As many notable tech companies posted their quarterly earnings over the last few weeks, their revenue was, for the most part, much higher than the previous quarter. However, investors and analysts focused on capital expenditures (capex), which have been higher in recent years as companies invest into AI architecture.
Fears over AI disruption and how the rapidly growing sector will affect jobs has pervaded the stock market. Industries as varied as trucking, financial services, real estate, and software were all impacted by AI concerns, and the Dow and S&P 500 both fell more than 1% over the previous week.
Of course, AI concerns hit tech stocks the hardest and the tech-focused Nasdaq dropped by more than 2% last week. The Consumer Price Index with its rosy reading was not enough to sink those fears, and the latest jobs data that showed unemployment was lower than expected did not do much to help dwindling tech stock numbers.
This Friday, the Personal Consumption Expenditure report will be released, helping to indicate where inflation is headed, but we expect that AI sector fears will persist. Investors should anticipate poor showing from many of the leading tech stocks as capital expenditures remain high for a fiercely competitive AI market.
- Check out our free forex signals
- Follow the top economic events on FX Leaders economic calendar
- Trade better, discover more Forex Trading Strategies
- Open a FREE Trading Account
- Read our latest reviews on: Avatrade, Exness, HFM and XM
Save