Nasdaq Falls 1.3% Thursday Due to Sinking AI Stocks
The tech rally may be over now after two days of declines that brought the Nasdaq down more than 2%.
Quick overview
- The Nasdaq Composite experienced a decline of 1.2% on Wednesday and an additional 1.3% on Thursday, primarily due to a sharp drop in AI stocks.
- Despite a ceasefire in the Middle East leading to lower oil prices, the stock market continues to trend downward, particularly in the technology sector.
- Leading tech stocks like Broadcom and CrowdStrike saw significant losses, indicating a market correction after a period of bullish performance.
- The cryptocurrency market is also facing challenges, with Bitcoin dropping 5.19% in the last 24 hours, reflecting a bearish sentiment.
The Nasdaq Composite dropped 1.2% on Wednesday and then another 1.3% on Thursday in early trading after days of upward progress.
The Dow Jones Industrial Average ticked up 0.5% and the S&P 500 fell 0.5% Thursday, while the Nasdaq continued its second day of losses after AI stocks fell sharply. Broadcom (AVGO) lost 14% in premarket trading, and CrowdStrike (CRWD) lost 10%, indicating a market price correction for technology futures.
Thursday is looking to be a rough day for the technology sector as Marvell Technology (MRVL) dropped 6.5% and Super Micro Computer (SMCI) fell nearly 7%. These stocks were bullish only days ago, but after several days of climbing, they felt the sudden impact of numerous investors selling off their shares to take advantage of the record highs.
Middle East Ceasefire Cannot Stop Plunging Tech Stocks
Israel and Lebanon agreed to a ceasefire this week, and oil prices dopped as a result. The price of West Texas Intermediate oil fell 1.4% while Brent crude dipped 1.6%. These benchmarks are at $94 and $96, respectively. Despite global tensions easing, the stock market is still unable to come out of its downward trend.
The decline across stock indices and in the tech sector in particular may be attributed to overinflated stock values. Tech stocks have been bullish for weeks, and analysts were concerned that the market would correct itself at some point. The sharp decline of leading technology stocks points to that correction happening this week. Investors should expect tech stocks to lose much of this week’s progress but not all of their gains over the last few weeks.
The tech rally that made headlines again and again in recent weeks was partly due to strong quarterly earnings among tech companies and especially those in the AI field. The rally can also be attributed to bullish sentiment toward the AI niche and its prospects of expansion.
The cryptocurrency market continues to fall, and Bitcoin dropped to $63,400 (BTC/USD) and lost 5.19% over the last 24 hours. Losses of around 5% over the last day are affecting much of the leading crypto tokens, pointing toward a bearish market for now. The US dollar index fell to 99.26, a loss of 0.3% as inflation holds around 3.8%.
Elon Musk’s SpaceX is setting its sights on an IPO offering of about $1.75 trillion with shares initially offered at $135. This is down from previous estimates but still well above any previous IPO in stock market history. The bullish sentiment toward this launch has lifted other space sector stocks and continues to build hype leading up to a summer public offering.
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