Stocks sink in worst day of 2024
Tesla’s slump, doubts about AI, and potatoes all contributed.
We’ve waited 587 days for a day this bad.
The S&P 500 had its worst loss since December 2022, shattering the 8th-longest streak without a 2% drop in the more than 70-year history of the benchmark index.
The pain was squarely in tech, with the Nasdaq 100 off 3.7%.
The Magnificent Seven had a no-good, very bad day — tumbling 5.9% in the group’s worst showing since September 2022.
Tesla was at the epicenter after reporting lower-than-expected profits for the fourth consecutive quarter while Elon Musk delayed a robotaxi showcase, part of a long-running theme in which he’s promised that good things will be ready “next year.”
The AI trade seemed to completely disintegrate, with standard bearers of the hype surrounding artificial intelligence such as Nvidiaand Super Micro Computertaking it on the chin with losses of 6.8% and 9.2%, respectively. Perhaps investors are beginning to wonder about the “buy-anything-vaguely-AI-related-and-hope-someday-it-becomes-a-business” strategy, as some Wall Street analysts covering Alphabet are starting to question. Alphabet fell 5% on the heels of its earnings report released after the close on Tuesday.
But it wasn’t just tech: 7 of the 11 S&P sector ETFs fell at least 1% on the day.
Lamb Weston, in fact, was the worst-performer in the S&P 500, shedding nearly 30% of its value after reporting abysmal earnings and warning that consumers pushing back against high prices at restaurants crimped demand for its potato products.
Small caps — which have been beneficiaries of a violent rotation in recent weeks — did relatively better than their large cap peers, but just barely. The Russell 2000 was down 2.1%.
There were, however, some bright spots in the traditionally defensive Utilities and Health Care S&P sector ETFs, which gained 1.1% and 0.8%, respectively.
A drop of 2.3% in the S&P 500 isn’t exactly a crash. But given how downright muted the swings in the stock market have been this year, it represents a jolt all the same.
And in fact, on a technical basis, the S&P 500 did pierce its 50-day moving average, a sign of a significant — if not particularly drastic — downshift in moment for the market. We’re still up nearly 14% for the year, but about a week ago that figure was 19%.
