The NASDAQ experienced its most severe downturn since 2022, plummeting over 3.6%. This significant drop was primarily driven by disappointing earnings from major tech companies like Alphabet and Tesla, raising concerns among investors about the sector’s future growth prospects.
On Wednesday, the NASDAQ faced heavy selling pressure, particularly from technology stocks, leading to a 3.64% decline. The index started the day at 17,733, peaked at 17,747, and then fell sharply, closing 654.94 points lower, hitting multi-week lows.
Other major indexes also suffered declines. The Dow Jones Industrial Average dropped 1.25% to close at 39,853, while the S&P 500 experienced a loss of over 2%, finishing the day at 5,427. This marked the S&P 500’s first drop of over 2% in a month.
The sell-off was triggered by Alphabet and Tesla, who reported less-than-expected financial performances. Alphabet, despite a 15% year-on-year increase in revenues for Q2, faced a downturn due to slower ad revenue growth and increased capital expenditures, falling over 5% to $174.37.
Tesla’s stock took a significant hit, dropping 12.33% to $215.99 after revealing a 7% year-on-year decrease in total automotive revenues for Q2 FY24. This result intensified investor worries about the ongoing profitability and growth trajectory of tech giants.
Despite the recent setbacks, the NASDAQ has shown resilience over the longer term, gaining nearly 17.5% since the beginning of the year and over 22% in the past year. However, the significant loss of over $750 billion in market cap from the Magnificent 7 stocks during Wednesday’s trading underscores the volatile nature of the tech sector.
