Nasdaq 100 Tumbles Into a Correction as Tech Selloff Intensifies
The Nasdaq 100 Index sank into a correction on Friday, as investors continue to sour on the megacap technology stocks that led the stock market rally over the past two years.
The index was down 0.8% at 10:37 a.m. in New York and is now 10.2% below a peak hit just last month, putting it past the 10% threshold that represents a market correction. Among notable decliners, Nvidia Corp. slid 0.7%, Amazon.com Inc. fell 1.5%, and Microsoft Corp. 1.9%. The Bloomberg Magnificent 7 Total Return Index, which entered a correction of its own in late February, 1.1% on Friday.
Much of the slump reflects Wall Street’s rapid rotation out of companies tied to artificial intelligence. Since the Nasdaq 100 hit a record high on Feb. 19, Nvidia has lost more than a fifth of its value and is responsible for 18% of the index’s overall decline, according to data compiled by Bloomberg that goes through Thursday’s close. Other notable decliners since that peak include Tesla Inc., Apple Inc., Palantir Technologies Inc., Meta Platforms Inc. and Amazon.com.
“Over the past few years, the Magnificent Seven have done exceptionally well, and they deserved the premium they were trading at because of how well they were growing their top and bottom lines,” said George Cipolloni, a portfolio manager at Penn Mutual Asset Management. “That has sort of changed. Earnings were pretty good for big tech this past quarter, but I’m not sure they’ll get much better from here, and there’s only so much a company can grow at these multiples.”
