Tech sales are tearing the Dow Jones to the ground.
Widespread fear of a recession sent the Dow Jones into a tailspin on Friday. The decline continued at the start of the week, with the Nasdaq and S&P 500 indexes also falling. Investors selling tech stocks are largely responsible for the losses.
A sell-off in technology stocks accelerated the decline on Wall Street. As of 4:53 PM ET, the Dow Jones Index was at 38,788.2 points, down 2.39% for the day. The Nasdaq 100 briefly fell to 16,206.53 points, a drop of 3.4%. The broad-based S&P 500 also extended its recent losses, falling by more than four percent at one point.
The VIX, known as the "fear gauge" of Wall Street, continued to rise to its highest level in over four years. Apple stock plummeted by as much as 10% at one point. The iPhone maker also faced additional pressure from Berkshire Hathaway, the investment company run by legendary investor Warren Buffett, which reduced its stake by nearly 50%.
Growing recession concerns, fueled by disappointing U.S. jobs data and weak global economic indicators, triggered a market downturn last week. Large tech stocks, which had been leading the market's record run, are now under significant pressure.
September rate cut seems 'light-years away'
At the start of the week, shares of chipmaker Nvidia also came under pressure. The stock dropped by as much as 15% after reports suggested that the market introduction of some AI chips was being delayed due to design flaws. Shares of Microsoft and Alphabet both fell by around 5% at one point.
A weak U.S. jobs report on Friday further fueled investor concerns that the U.S. economy may be cooling faster than expected. In this scenario, the first rate cut expected from the Federal Reserve in September seems "light-years away," according to Eckhard Schulte, CEO of MainSky Asset Management.
Despite the continued bad news from the tech sector, the market is not in a crash, but rather in a correction phase. Investors once again fled to safe-haven assets at the start of the week. Ten-year U.S. Treasury notes rose to their highest level since June 2021 in early trading.
The sell-off in tech stocks has put both investors and enterprises on edge, as they closely monitor the market's volatility. With the prospect of a rate cut seemingly distant, investors are turning to safe-haven assets for protection.
