Big Tech Falters: Magnificent 7 Sheds Over $1 Trillion As Apple ...
Monday’s global stock market rout ravaged the share prices of the mega American technology companies which buoyed the last two years’ boom times, as equities on pace for their sharpest decline since the beginning of the COVID-19 pandemic.
Monday is a brutal day for long investors.
Getty Images Key FactsAmerican stock indexes tanked shortly after Monday’s market open, as the blue chip Dow Jones Industrial Average’s 2.8% decline set it up for its worst loss since September 2022, the S&P 500’s more than 4% drop paced it for its most painful day since September 2022 and the tech-heavy Nasdaq Composite’s 6.2% dive set it on track for its starkest decline since March 2020.
Hit the hardest were shares of the growth-focused “magnificent seven” tech companies as investors braced for the possibility of a sharp economic slowdown.
Apple shares opened down 8%, Microsoft 5%, Nvidia 14%, Google parent Alphabet 6%, Amazon 8%, Facebook parent Meta 7% and Tesla 11%.
The septet, which accounted for about a third of the entire market capitalization-weighted S&P at Friday’s market close, lost a combined $1.2 trillion in market value minutes after trading began.
On pace for their worst respective daily percentage drops since March 2020, Apple and Nvidia stocks were the biggest fallers in terms of market value, as Apple registered a roughly $270 billion loss and Nvidia a $380 billion loss.
All of the magnificent seven are now in a 10% correction or worse, led by Amazon’s 24% expected fall from its July 2 record closing high and Nvidia’s 32% unraveling from its June 18 high.
Why Are Stocks Down?The brutal selloff is a combination of several factors coming together into one fireball stoking investor fear. Domestically, the major drivers include Friday’s jobs report, which revealed a far weaker labor market than expected and triggered sharp stock losses, and Wednesday's lack of commitment from the Federal Reserve to interest rate cuts, which would help stimulate economic growth. Investors simultaneously continued to nurse concerns from the last few weeks’ big tech earnings calls about higher artificial intelligence-related expenses and less clear related profits from AI. Apple stock was also weighed down by Berkshire Hathaway disclosing Saturday it cut its massive stake in the iPhone maker in half, while Nvidia shares slumped amid reports of delays in its generative AI semiconductor chips. Overseas, concerns about the impact of Japan’s increasing its near-zero borrowing costs on “carry trades” caused Japan’s Nikkei stock index to register its worst day since 1987.
ContraThe sudden decline is chilling for investors, but it’s not new for the often rocky stock market. The S&P is still up about 8% year-to-date.
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