Shares of technology companies faced a challenging day of trading as concerns over rising interest rates weighed heavily on the sector. It marked one of the worst trading days for technology stocks this year.
Market turbulence ensued due to a combination of factors. Fitch's recent downgrade of the U.S. government's debt, coupled with an unexpectedly robust report on private-sector employment by ADP, has heightened the possibility of increased interest rates.
The renowned tech giants, often referred to as the "Magnificent 7" — Apple, Microsoft, Alphabet, Amazon.com, Nvidia, Meta Platforms, and Tesla — all experienced declines in their stock prices. Apple, which is set to release its earnings report on Thursday, fared relatively better with a 1.6% dip. However, the other six companies saw drops of 2% or more, with Nvidia witnessing a significant fall of 4.8%.
Profit-taking was observed in the highly sought-after generative AI market, resulting in C3.AI's shares dropping by 10% and Palantir experiencing a 5.1% decline. Additionally, a general sell-off was witnessed in cloud computing and security software stocks.
Despite beating earnings expectations, Advanced Micro Devices witnessed a 7% decrease in its stock price. This led at least one analyst to speculate whether the market had overly optimistic expectations for the company's artificial intelligence initiatives.
After market close, Qualcomm reported a halving of profits compared to the previous year, reflecting declining revenue in the smartphone market's turbulent environment.
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