The Nasdaq 100 Index posted its biggest intraday drop in nearly two years as investors braced for days of volatility amid rising concerns over a slowing U.S. economy and overheated gains in the technology sector.
The tech-tracking benchmark tumbled nearly 5% as of 9:41 a.m. in New York, falling deeper into correction territory as it slid the most intraday since September 2022. The the S&P 500 Index sank 3.7%, and the VIX Index of stock-market volatility spiked to a level not seen since the coronavirus outbreak more than four years ago.
Megacap tech high-fliers bore the brunt of the losses, with the Bloomberg Magnificent 7 Index plunging the most since 2015 amid a rout in names including Nvidia Corp. Apple Inc. Microsoft Corp., Meta Platforms Inc. and Tesla Inc.
Concerns over health of the U.S. economy took center stage after data Friday showed rising unemployment levels in July, triggering a closely watched recession
"With the summer low liquidity, the still heavy trend plays that need unwinding and the VIX sky-high, this selloff move could go on for a few days," said Florian Ielpo, head of macro research at Lombard Odier Asset Management. Still, "the macro picture itself is not as bad as the market seems to think."
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"When sentiment begins to sour, the falls become more extreme than perhaps they should be," said Ben Barringer, an analyst at Quilter Cheviot. The next few weeks ares likely to be volatile for tech stocks, he said.
Turbulence in markets in Japan — where the central bank has started to raise interest rates as the Fed looks to cut — is also rippling across global markets in various asset classes. Investors are moving to reverse
"With yen carry trades now being unwound quickly, not only has the Japanese currency notably broken its depreciation trend against all major units, but risk assets that those trades were financed with are also being sold off," Asymmetric Advisors strategist Amir Anvarzadeh wrote in a note to clients.