The Nasdaq Composite tumbled further on Friday, dipping 10% below its July high and officially entering correction territory.
Worries over disappointing tech earnings and a slowing U.S. economy have spooked investors.
The index fell 2.4% after a softer-than-expected jobs report stoked fears that the Federal Reserve might have to slash interest rates to stave off a recession.
Weak earnings from Amazon and Intel added fuel to the fire.
“This is an old-fashioned correction,” said Tom Plumb, CEO of Plumb Funds.
“We’ve shifted from growth to needing government intervention with lower interest rates to stabilize the economy.”
Historically, the Nasdaq has slipped into correction territory about once every two years, usually rebounding within a month. Despite the recent slide, the Nasdaq remains up 11.8% for the year, while the S&P 500 is up 12.1%.
Investor anxiety is peaking as the highly valued tech stocks, previously buoyed by AI excitement, now face increased scrutiny.
Compounding this are seasonally volatile months, with September and October typically rocky for U.S. shares.
“We’re seeing the correction many anticipated heading into summer,” said James St. Aubin, CIO at Ocean Park Asset Management. “Various factors are piling on, making the market nervous.”
Lackluster results from Tesla and Alphabet have heightened concerns about overvalued stocks and potential economic softness.
JJ Kinahan, CEO of IG North America, noted that the market focus has shifted from earnings to what those earnings say about the broader economy.
The slowdown is a stark reminder of the delicate balance in the business world, where even the mightiest tech giants aren’t immune to economic pressures.
Surging bond prices and falling yields suggest investors are seeking safe havens, signaling a potential global slowdown.
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