Nasdaq Struggles to Recover from Tech Stock Sell-Off
Tech stocks are up slightly today after falling on Wednesday and are still under intense selling pressure related to AI fears.
Quick overview
- Tech stocks experienced a sell-off on Wednesday, with Oracle and Nvidia dropping significantly, contributing to a 1.8% decline in the Nasdaq Composite.
- On Thursday morning, the Nasdaq rose 0.8% as investors awaited the latest inflation report, while the S&P 500 and Dow Jones also saw slight gains.
- Concerns over profitability in the AI sector have led to significant declines in tech stocks, with Broadcom falling 8% this week amid worries about unsustainable business models.
- Micron Technology saw a notable increase of over 11% after providing a positive forecast, helping to alleviate some fears in the AI market.
Tech stocks fell on Wednesday as part of a market-wide sell-off, with Oracle (ORCL) dropping 5.4% and Nvidia (NVDA) down 3.8%, causing the Nasdaq Composite to drop as well.
After Wednesday’s drop by 1.8%, the Nasdaq rose 0.8% on Thursday morning in early market trading. Investors are waiting to see what the latest inflation report shows, and until its release, stocks are moving upward hesitantly.
The S&P 500 is up 0.4% on Thursday, and the Dow Jones has added 0.1% after a bearish Wednesday. AI worries continue to plague the market and keep many tech stocks low, and we anticipate they will continue to do so for the time being.
Tech Stocks Falter This Week
This has been yet another poor week for technology stocks, particularly those associated with artificial intelligence. Broadcom (AVGO) has now fallen 8% for the week thanks to a lack of profitability. The company’s management says that they will be growing their artificial intelligence sector, and those efforts could continue to cut into profits.
This has been a persistent problem across the tech market- as companies pour money into AI technology by developing products and buying expensive components so that they can keep up with their competition, they are bleeding revenue quickly. Investors are worried that this business model is not sustainable, and they are selling off their tech stocks en masse.
This week, Nvidia, Oracle, Microsoft (MSFT), and Advanced Micro Devices (AMD) all saw steep declines. However, many of these and other tech stocks were climbing Thursday morning in premarket trading. This indicates a shift in the market direction, at least for the moment.
Micron Technology (MU) soared on Wednesday and continued its climb on Thursday with gains of more than 11% after setting forward their forecast for the next quarter. They supply components to Nvidia, and they expect to perform very well in the coming months. Their outlook is helping to disperse AI market fears and drive tech stocks higher in the last half of the week.
Investors should be watching for the CPI report later this week as well as the latest jobs report. Employment numbers may not mean as much this time, though, since the data has been held back by the government shutdown. The market may be more focused on inflation and earnings to fuel their movements until the jobs data catches up.
- 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
Save