The US stock market plunged on Wednesday, dragged down by a
sell-off in megacap technology stocks after disappointing earnings reports from
Google’s parent company, Alphabet, and electric vehicle maker Tesla. A weak
start to the megacap earnings season sparked concerns about the recent bull
rally fueled by the artificial intelligence boom.
The Nasdaq Composite suffered its worst single-day
performance in two years as key players stumbled after releasing second-quarter
earnings. The tech-heavy index dropped more than 3%, losing over 650 points on
Wednesday, marking its steepest decline in more than 400 trading days.
Alphabet’s stock fell 5% despite posting financial figures
that surpassed forecasts for both revenue and earnings. Tesla, however, dropped
13% after reporting a 45%
year-over-year decline in profit.
This likely triggered a chain reaction across tech stocks.
Nvidia and Meta Platforms lost 6.8% and 5.6%, respectively, while Microsoft stock slid 3.6%. The
high-flying and volatile group known as the Magnificent Seven saw its combined
market value decrease by $768 billion by the closing bell.
Wednesday’s negative reaction to the results has heightened
concerns about the ability of megacap stocks to deliver strong performance.
Even robust results next week from Apple, Amazon, and other tech giants may not
be well-received by Wall Street.
The sell-off extended beyond the Nasdaq, leaving investors
with nowhere to hide. The broad-based
S&P 500 fell 2.3%, and the Dow Jones
Industrial Average lost 1.2%, or 504 points. This sharp decline has sparked
fears that investors may have been overly optimistic about the potential
returns from artificial intelligence and the impact of new tech on the market.
