Nasdaq Drops Over 3%, Posting Its Worst Day Since 2022; Tech Stocks Lead Sell-Off

The US stock market fell sharply on Wednesday due to a major sell-off in big tech stocks. Disappointing earnings reports from Alphabet (Google’s parent company) and Tesla led the decline. The poor start to the big tech earnings season raised concerns about the recent bull market driven by excitement over artificial intelligence.

The S&P 500 and Nasdaq closed at multi-week lows. The S&P broke one of its longest streaks without a daily drop of more than 2%. The Nasdaq saw its largest one-day percentage drop since October 2022, finishing at its lowest level since June 10. The Dow Jones Industrial Average closed below 40,000 points for the first time in two weeks.

On Wednesday:

• The Dow Jones Industrial Average fell 504.22 points, or 1.25%, to 39,853.87.
• The S&P 500 dropped 128.61 points, or 2.31%, to 5,427.13.
• The Nasdaq ended 654.94 points, or 3.64%, lower at 17,342.41.

Tesla shares plunged 12.3%, their worst single-day drop since September 2020, after missing profit estimates and delaying their Robotaxi project.

Alphabet’s stock dropped 5%, its worst finish since May 31, after the company warned of high capital expenses and slower advertising growth.

Other tech stocks also suffered:

• Super Micro Computer Inc. fell 9.15%.
• Nvidia shares dropped 6.8%.
• Broadcom shares fell 7.6%.
• Meta Platforms stock fell 5.6%.
• Microsoft Corp. shares slid 3.6%.
• Apple stock dipped 2.9%.

The sell-off caused a Bloomberg index of the “Magnificent Seven” tech stocks to drop 5.9%, falling below its average price for the past 50 days for the first time since May. Despite this, the index is still up 33% since the start of the year.

Microsoft Corp. is set to report its financial results on July 30, followed by Meta Platforms Inc., Apple Inc., and Amazon.com Inc. later in the week. Nvidia, the biggest beneficiary of AI spending, will report its results on August 28, according to Bloomberg.