Tech Stocks Fall on Nasdaq’s Worst Day Since 2022

On Wednesday, tech stocks took a major hit as investors offloaded the giants driving this year's massive rally. The Nasdaq Composite index plunged by 2.8%, marking its steepest drop since December 2022. 

Meanwhile, the S&P 500 fell by 1.4%, contrasting with the Dow Jones Industrial Average, which rose 0.6% to a new record high, surpassing the 41,000 mark for the first time, just two months after breaking the 40,000 barrier.

Key tech stocks faced severe declines, with Nvidia (NVDA) falling 6.6% and Advanced Micro Devices (AMD) dropping by 10.2%. This downturn followed a Bloomberg report suggesting that the Biden administration is considering additional sanctions on Chinese tech firms and increased restrictions on semiconductor trade between the U.S. and China.

The Russell 2000 index, tracking small-cap stocks, showed mixed performance, dipping during midday trading but remaining up by 4.5% for the week. The Magnificent Seven, the tech stocks primarily benefiting from the artificial intelligence boom, also suffered losses. Microsoft (MSFT) dropped 1.3%, Apple (AAPL) decreased by 2.5%, Amazon (AMZN) fell by 2.6%, Alphabet declined by 1.6%, Tesla slid by 3.1%, and Meta Platforms lost 5.7%.

Investor sentiment also shifted due to recent economic data. A report last week indicated cooling inflation, and stronger-than-expected retail sales data released on Tuesday increased speculation about a potential rate cut in September. 

This economic backdrop has led investors to favorstocks that typically perform better in a low-interest-rate environment.