The elite “Magnificent Seven” of American tech firms — Apple, Microsoft, Alphabet, Amazon, NVIDIA, Tesla, and Meta — suffered a significant slump on Tuesday. Most of these companies, which have been supporting a vigorous stock market growth for several months, saw a notable drop. The combined capitalization of the magnificent seven dipped by $233 billion, triggering a collapse of other American stocks. Among the seven, only NVIDIA stocks remained steady and continued to rise in value.
Apple’s shares fell by 2.8% on Tuesday, while Amazon’s securities tumbled almost by 2%. Microsoft stocks became cheaper by 3%, and Alphabet, Meta, and Tesla’s stocks slumped by 0.5%, 1.6%, and 3.9% respectively. NVIDIA was the only one among the group of seven largest tech firms whose stocks concluded Tuesday with a growth of 0.9%. The Dow Jones Industrial Index DJIA decreased by 404 points, or 1%. The S&P 500 SPX Index lost 1%, and the Nasdaq Composite COMP Index closed 1.7% lower than the previous day.
This decrease represents the third-largest single-day market capitalization loss for the “Magnificent Seven” this year, with a record reversal of $375 billion recorded on January 31. According to Michael Sansoterra, the investment director at Silvant Capital Management, “It’s not a panic sell-off. Given that stocks recently set several new records, a retreat from companies holding narrow leadership in stocks is not surprising. This is just typical market movements in what has been a strong bull market.”
In the near future, Jerome Powell, the chairman of the Federal Reserve, will present before Congress. Investors are hoping to hear more about the central bank’s plans to reduce interest rates. Peter Cardillo, the Head Market Strategist at Spartan Capital Securities, believes we are experiencing an adjustment phase and the future direction depends on Powell’s upcoming stance and employment figures. He said, “If tomorrow Powell makes a sharp turnaround and employment indicators exceed expectations then we could be headed for the Ides of March.”
Notably, even financial analysts aren’t immune to poetic references — Cardillo is alluding to William Shakespeare’s warning about the bloody betrayal of Julius Caesar in his namesake play, where the Ides of March falls on March 15. Hence, Wall Street’s poetry lovers are now keenly watching as this date approaches, anticipating potential troubles.
This Friday, up-to-date employment data will be published for February. Despite a short-term federal fund rate fixed at a 22-year high as part of the fight against inflation, the labor market and the economy have remained surprisingly resilient.
Investors have delayed their expectations about the timing and scale of a potential rate reduction this year since the Fed representatives have stuck to their policy of heightened interest rates as long as the inflation continues to exceed the central bank’s annual target rate of 2%.
This post was last modified on 03/07/2024