Nasdaq Sinks 4%, Dow Cascades as Global Selling Intensifies

Live3 updates

• Monday, August 5, 2024 at 6:31 am PDT

  Stocks plunge as technology leads losses and Dow drops more than 1,000 points

  Major averages tumbled Monday morning as foreign markets sold off and amid growing concerns about the weakening U.S. economy.

  The Dow Jones Industrial Average (^DJI) lost more than 1,000 points. The Nasdaq Composite (^IXIC) fell about 6% after the tech-heavy index entered a correction with Friday’s steep losses. The S&P 500 (^GSPC) lost about 4%.

  Nvidia (NVDA) stock and the rest of the “Magnificent 7” stocks led the broader market decline.

  Shares of the AI ​​chip heavyweight fell 15%, their worst day since March 2020.

  Individual company news also pressured shares after the information reported The company’s upcoming next-generation AI chips will be delayed by three months, potentially impacting its biggest customers such as Microsoft, Alphabet and Meta.

  Alphabet (GOOGL) (GOOG) and Meta (META) opened down more than 6%. EV giant Tesla (TSLA) plunged more than 9%.

  Meanwhile, Apple (AAPL) shares fell more than 10%. Over the weekend, Berkshire Hathaway (BRK-B) revealed that it has cut half of its stake in the iPhone maker.

  E-commerce giant Amazon (AMZN) fell more than 8%, while software maker Microsoft (MSFT) plunged 5%.

  Together, the Mag 7 represents about 43% of the Nasdaq 100’s weighting. The Nasdaq 100 had its worst opening since March 2020.

• 

  Monday, August 5, 2024 at 5:46 am PDT

  Markets correct through price or time

  Stocks were under severe pressure on Monday morning and the story is both complicated and simple – investors worry that the Fed waited too long to start cutting rates.

  But the wild moves we’re seeing in the markets on a not-great but not-terrible report are forcing us to turn our attention to the dynamics of the market itself rather than additional news about the economy, earnings, etc. about.

  Which reminds us of one of our favorite market sayings: markets correct through price or timing.

  Which means that when the price of any asset – a share, a bond, etc. – changes. – is divorced from its fundamental factors, the price of that asset will find equilibrium, either falling in price or going nowhere while the fundamentals recover.

  With fears spreading across markets that the Fed is no longer cutting rates for the right reason (inflation is at its 2% target) but for the wrong reason (the economy is entering a recession), investors are choosing the first option.

  The current earnings season is on track to show that second-quarter profits rose at the fastest annual pace in nearly three years. Recent market action suggests that investors think future earnings expectations are simply too high.

  And instead of waiting to see if stocks trading at current prices can “grow” at these valuations, investors are selling first and asking questions later.

• 

  Monday, August 5, 2024 at 5:36 am PDT

  What to watch today

  Good point from Dennis DeBusschere of 22V Research in a new note on whether to buy the dip at the open:

  “If investors want to buy into the oversold condition, credit spreads and inflation expectations need to send a signal that the current economic expansion will continue.”

  Suffice it to say, keep an eye on these two things during your session.