Market Report: Tech Stocks Plunge as Nvidia Leads the Way Down
When the closing bell signaled the end of trading, the broad S&P 500 was down 2.1 percent at 5,529. Compared to the closing of the Stockholm Stock Exchange, this represented a decrease of 0.8 percent. The Dow Jones Industrial Average also fell by 1.5 percent to 40,936, while the tech-heavy Nasdaq Composite index performed the worst, dropping 3.3 percent to 17,136.
The stock rocket Nvidia plummeted by 9.5 percent without any company-specific news, dragging the semiconductor sector down with it. This led to declines of 7–9 percent for AMD, Intel, and Qualcomm. However, Nvidia is still up over 100 percent for the year.
Among the other so-called “Magnificent 7” companies, e-commerce conglomerate Amazon performed the best relatively, but still saw a decline of 1.2 percent. Google’s parent company, Alphabet, fared worse with a nearly 4 percent drop. Apple, Meta Platforms (owner of Facebook and Instagram), and Microsoft were all down by 2–3 percent. Electric car manufacturer Tesla fell just under a couple of percent.
The sour market sentiment was influenced by the publication of S&P Global’s definitive industrial PMI for August. The outcome was 47.9 compared to expectations of 48. While the difference from the consensus was marginal, it was a more significant decline from July’s figure of 49.6. ISM also released industrial PMI figures, with the outcome of 47.2 slightly below the consensus of 47.5. Additionally, it was revealed that construction investments in the country decreased by 0.3 percent in July, slightly worse than expectations of an unchanged level.
Outside the tech sector, cyclical stocks also took a hit after the aforementioned data. Among these, construction equipment manufacturer Caterpillar fell by 4.5 percent, and the S&P sector index for industrial companies was down by over 2 percent. In comparison, the tech sector index was down 4.4 percent.
Airplane manufacturer Boeing fared even worse, with its stock dropping by 7.3 percent after Wells Fargo lowered its recommendation from neutral to underweight. Wells Fargo justified the downgrade by stating that Boeing’s free cash flow per share will peak in 2027, according to the bank’s analysis, as development costs offset production growth.
Contrary to the trend, Unity Software, operating in the gaming sector, saw a slight increase after Morgan Stanley upgraded the stock to overweight. The bank highlighted the company’s unique position in game engines and lower risk for future estimates.
United Steel was down 6 percent after Vice President and Democratic presidential candidate Kamala Harris expressed opposition to the sale of the steel company to Japanese Nippon Steel.
The oil sector performed poorly overall as oil prices took a hit due to media reports of potential supply increases from resumed Turkish oil production and the negative sentiment. A Goldman Sachs analysis also showed a pessimistic view regarding China’s economic recovery. Exxon Mobil and Chevron both fell by around 2 percent each.