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NEW YORK, April 26, 2024
Tech Stocks Stumble as AI Concerns and Rates Bite
Table of Contents
Market volatility is rising as investors reassess tech valuations amid uncertainty surrounding artificial intelligence and persistent interest rates.
- The Nasdaq Composite is down more then 1% today, while the Dow Jones Industrial Average holds steady.
- Concerns about the impact of AI on software companies and the costs of data centre infrastructure are weighing on tech sentiment.
- Energy, basic materials, and consumer staples are leading the market’s gains year-to-date.
- Cryptocurrencies continue their downward trend,reflecting broader risk aversion.
Crypto Struggles Amid Regulatory Uncertainty
Bitcoin is up 4% over the last twelve months. Ethereum is down 4.2% and is down 31% over the same period. Even if regulatory clarity is passed, investors may remain cautious about this volatile asset class.
Earnings Reactions and Tech Sell-off
On the earnings front, one company had solid beats on both top and bottom lines but reported lower-than-expected data center business and rising expense levels. The shares are down sharply -15.9% (-4.9% YTD, +70.4% LTM), marking the worst day in years, and has sent a shiver through hardware makers. Semiconductors are down 3.9% today, including one major chipmaker down 3.1%. Another company had a huge beat on the top line and a solid beat on the bottom line and raised guidance. the shares are up 9.8%, +2.6% YTD, +33.7% LTM. Earnings from Alphabet are due tonight,and another tech giant reports tomorrow.
Looking Ahead
As the trading day progresses, the Dow and the equally-weighted S&P 500 are holding onto their gains, while the Nasdaq has fallen to down more than 1% and the Majestic 7 is down 0.9%. The S&P 500 has broken below 5,000, down 0.3%, and the russell 2000 is down 0.8%. The correction in tech is driven by high valuations and stubborn interest rates
