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Nvidia’s stock price plunged 10% on Friday, helping seal the worst performance in U.S. stock markets since October 2022, as investors shunned risky assets ahead of next week’s wave of big tech earnings.
The chipmaker had its worst session since March 2020, losing more than $200 billion in market value that day. The decline represents about half of the 0.9% drop in Wall Street’s S&P 500 index, according to Bloomberg data.
Netflix, meanwhile, lost about 9% a day after the streaming service’s announcement that it would stop regularly disclosing its subscriber numbers, which overshadowed higher-than-expected profits. The tech-heavy Nasdaq Composite ended the session down 2.1 percent.
Stocks that benefited from investor enthusiasm for artificial intelligence also suffered, with Advanced Micro Devices, Micron Technology and Meta closing down 5.4 percent, 4.6 percent and 4.1 percent, respectively. . Super Micro Computer, a server equipment group seen as a beneficiary of the AI boom, closed down 23 percent.
“It’s a tough day for tech stocks,” said Kevin Gordon, senior investment strategist at Charles Schwab. “Everything that was going well earlier this year is falling apart, but the banks and the energy sector are doing well. [defensive] staples. »
Friday’s decisions come as investors begin to take seriously the possibility that the U.S. Federal Reserve could cut interest rates by just a quarter point this year, if at all. The retaliation between Iran and Israel has also increased investor anxiety, dampening the market’s recovery.
But analysts said Friday’s selloff was instead due to investors hastily repositioning their portfolios ahead of next week’s wave of earnings from big tech companies.
“The decline in stocks has very little to do with [interest] rates,” said Parag Thatte, a strategist at Deutsche Bank. “This is more because investors anticipate a slowdown in earnings growth. [for Big Tech].”
Andrew Brenner, head of global fixed income at NatAlliance Securities, said “there is no relative pressure on rates” in the absence of further Fed announcements. “But stocks are crashing.”
Microsoft, Alphabet and Meta will all report their first quarter results next week, while Nvidia’s results are expected in late May. Although all should have performed well, they face difficult quarterly comparisons.
Annual earnings per share growth for Nvidia, Meta, Microsoft, Amazon, Alphabet and Apple peaked at 68.2 percent in the fourth quarter of 2023. UBS analysts expect the Big 6 to report earnings growth EPS of 42.1 percent. for the first three months of this year.
Wall Street’s benchmark S&P 500 lost 0.9 percent on Friday, capping its worst week in more than five months in percentage terms. The index has fallen every day since last Friday, its worst trend in a year and a half.
All of a sudden, “the dip buyers are no longer buying the dip.” . . or if they are, they’re overwhelmed,” said Mike Zigmont, head of trading at Harvest Volatility Management.
The dollar index remained stable that day while oil prices rose slightly.