As tech goes, so goes the broader stock market. That’s not a good thing right now. The S & P 500 and Nasdaq Composite tumbled 2.1% and 3.3%, respectively, on Tuesday. That marked each benchmark’s’ worst day since the Aug. 5 sell-off. The losses were led by declines in tech. Nvidia dropped more than 9%, its biggest one-day decline since mid-April. ON Semiconductor dropped 8.8% and Advanced Micro Devices lost 7.8%. Apple retreated 2.7%, while Alphabet sank 3.7%. Tech has been the market stalwart all year, with enthusiasm around artificial intelligence driving stocks to record levels. Near term, however, the sector could be under pressure. “While some of the froth seems to have come out, medium term flows into Tech have yet to hit a low and positioning is still somewhat elevated across Retail, ETFs, and [hedge funds] in AI TMT stocks,” traders at JPMorgan wrote, referring to tech-media-and-telecom. “Thus, we might not see the same type of quick 20% peak-trough decline that we saw in AI TMT stocks from mid-July to early Aug., but lingering underperformance of Tech could persist.” The latest Wall Street pullback also comes amid renewed fear over the state of the U.S. economy. Two data sets released Tuesday showed contraction in U.S. manufacturing . To be sure, Jonathan Krinsky of BTIG noted the relative outperformance in certain sectors doesn’t point to a recession. “The confusing part is that it has been replaced by some low-vol sectors (defensive), but also areas like financials and industrials. Financials [made] an 18-month relative high [Tuesday]. If the market was worried about an imminent recession, we wouldn’t see that sort of set-up,” wrote the firm’s chief market technician. Krinsky also said it’s still possible for the S & P 500 to reach an all-time high in the near future, but noted the path above the previous peak is “going to be messy.” Elsewhere on Wall Street this morning , Morgan Stanley upgraded container and packaging maker Ball Corp. to overweight from equal weight. “We see an attractive buying opportunity,” the bank said. “We believe investors are overly focused on near-term North American volume underperformance vs. peers and are under-appreciating the company’s ability to grow earnings into the medium term.”
