Shares of several major technology companies plunged on Monday morning amid a broader market sell-off.
Nvidia saw the biggest drop in technology shares Magnificent Seven, opening 14.2% lower compared to market close on Friday. Tesla opened down 10.9%, while Apple fell 9.6% and Amazon fell 8.2% in early trading.
Meta, the parent company of Facebook and Instagram, opened down 7.6%, while Alphabet, the parent company of Google, fell 6.8%. Microsoft saw the least volatility among major technology stocks, falling 4.8 percent at market open on Monday.
Shares of all seven companies recovered slightly by midday, although they remained lower.
Tech stocks’ sharp drop on Monday morning came as the broader market suffered a downturn amid growing concerns about a recession. Investors were spooked by Friday’s weaker-than-expected jobs report, which showed the U.S. added just 114,000 jobs and the unemployment rate rose to 4.3 percent.
The Dow Jones Industrial Average opened with a loss of 1,100 points on Monday, falling 2.8 percent, while the Nasdaq Composite fell 6.2 percent and the S&P 500 index sank 4.2 percent after the market open. .
“The perfect storm of panicked tech sell-off has now gained steam after yesterday’s weaker jobs report fueled R-word fears and concerns that the Fed is now too late in its cutting cycle with tech stocks at the center of this Category 5 selloff storm,” analysts at Wedbush Securities wrote in a research note Saturday.
Top technology stocks, already on shaky footing after mixed second-quarter results over the past two weeks, are also reeling from Warren Buffett’s decision to cut Berkshire Hathaway’s stake in Apple in half.
However, Wedbush analysts argued in another note Monday morning that now is “not the time to panic in tech trading.”
“We are hearing from investors around the world today/over the weekend wondering if this tech bull market and historic run into tech stocks is over?” they wrote. “It’s not in our opinion and this is just a tense moment in a multi-year bull run for technology stocks that needs to be reined in.”
Amid widespread excitement about the potential of artificial intelligence (AI), the technology sector has driven much of the market’s gains this year. At the end of June, the Magnificent Seven accounted for 75% of the S&P 500’s gains, according to Axios.
However, technology stocks have also been a drag on the market in recent weeks. Following weak earnings reports from Alphabet and Tesla in late July, the S&P 500 and Nasdaq Composite fell to multi-week lows.
Despite the current sell-off, John Higgins, Chief Markets Economist for Capital Economics, is skeptical about the end of the AI-powered market recovery.
“It feels less like 2000 – when the dot-com bubble burst – than 1998 – when a temporary pullback in stock prices coincided, as now, with the resurgence of the yen,” Higgins wrote in an analysis on Monday.
“Still, there is one big difference between now and 1998: the absence of a major problem and risk for the US financial system,” he continued. “Our best guess is that the stock market will recover as the economy performs better than feared and investors rediscover their enthusiasm for AI.”
This story originally appeared on thehill.com read the full story
