Nasdaq 100, Dow Jones, S&P 500 News: Tech Stocks Struggle, Nvidia, Super Micro Plunge

Market Downturn Driven by Rate Cut Pessimism

Friday marked a downturn for both the Nasdaq and the S&P 500, influenced primarily by a drop in Netflix shares, despite American Express’s positive performance buoying the Dow. This decline came amidst growing skepticism regarding the Federal Reserve’s inclination to cut interest rates soon, which contributed to the bearish sentiment across markets.

Market Performance

The Dow Jones Industrial Average rose modestly by 0.56% to 37,986.40, while the S&P 500 and Nasdaq Composite saw decreases of 0.88% and 2.05%, respectively. Over the week, the S&P 500 registered its largest weekly drop since March 2023, and the Nasdaq experienced its most significant weekly fall since late October 2022. Both indices have been declining for six consecutive sessions, their longest streak since October of the previous year.

Stocks Making Headlines

Chip-related stocks experienced sharp declines, with the Philadelphia Semiconductor Index dropping 4.5%. Nvidia saw a significant 10% drop, marking its worst day since March 2020, despite no direct negative news. Similarly, Super Micro, heavily linked to Nvidia through AI server builds, fell 23% as it postponed its earnings report, unsettling investors. American Express, however, provided some relief by outperforming expectations, supporting the Dow. Meanwhile, Netflix’s forecast for lower revenue and decision to stop reporting subscriber numbers further dampened market sentiment, highlighting a tumultuous day for major tech stocks.

Treasury Yields and Federal Reserve

Treasury yields fell slightly, with the 10-year Treasury yield dropping to 4.623%. This movement reflects investor reactions to global events, including a military strike by Israel against Iran and ongoing economic data releases. Federal Reserve officials have recently suggested that interest rates may stay higher for longer than anticipated, dampening hopes for imminent rate cuts. This sentiment was echoed by multiple Fed Presidents, indicating a cautious approach to future monetary policy adjustments.

Short-Term Outlook

The outlook for equities remains bearish in the short term. Despite a previous five-month rally fueled by rate cut expectations, recent economic indicators, including persistent inflation and robust labor market data, along with geopolitical tensions, have shifted market expectations. With the Federal Reserve likely to maintain or even increase rates, the emphasis on earnings growth becomes more critical, suggesting challenging times ahead for stock markets as rate cut prospects diminish.

Technical Analysis