U.S. equities tumbled this week, with the S&P 500 shedding roughly $1 trillion in market value as a tech-driven selloff intensified ahead of anticipated Federal Reserve guidance on interest rates.
The S&P 500 fell for a fourth consecutive session, while the Nasdaq 100 slid 1%, driven largely by declines in high-flying technology stocks. Nvidia Corp. extended a two-day drop to 5%, and Palantir Technologies Inc., which nearly doubled in value earlier this year, fell 20% over six days. Analysts cited concerns about overstretched valuations among megacap tech companies at a time when the Fed may not provide the level of policy easing previously expected.
“We’re going to have to see more downside follow-through before we raise any yellow warning flags,” said Matt Maley of Miller Tabak. “Investors could become very nervous very quickly if the tech sector—and thus the market—starts to see a material decline.”
Oaktree Capital Management co-founder Howard Marks warned that U.S. stocks are “in the early days” of a bubble, though he stopped short of sounding the alarm. “The point is that things are expensive,” he told Bloomberg Television.
Investors are bracing for Federal Reserve Chair Jerome Powell’s speech at Jackson Hole on Friday, while bond markets saw mild gains, with 10-year Treasury yields falling two basis points to 4.28%.
To some strategists, the selloff represents a rotation out of overextended tech positions rather than a broader market collapse. “Rotation can only take place if the tech stocks hold up. If they decline, the only rotation we’ll see will be into cash,” Maley said. Fawad Razaqzada of City Index and Forex.com noted that profit-taking has dominated over continued risk-taking amid concerns over stretched valuations, though he expects the downside to be limited.
Some investors view the current pullback as a buying opportunity. JPMorgan Chase’s trading desk noted that upcoming economic data and Powell’s remarks could shift market narratives. “Today feels like a test for the dip-buyers,” wrote Andrew Tyler, head of global market intelligence at JPMorgan.
Corporate highlights this week included Microsoft limiting Chinese firms’ access to early cybersecurity alerts following investigations into SharePoint hacks, Target naming Michael Fiddelke as CEO, TJX raising its full-year earnings outlook, and Estée Lauder issuing a weak profit forecast partly due to tariffs. Lowe’s announced an $8.8 billion acquisition of Foundation Building Materials, while Guess? Inc. will be taken private by Authentic Brands Group.
Other notable corporate moves: Novo Nordisk implemented a global hiring freeze, Baidu posted slight revenue declines, and SQM, the world’s largest lithium producer by market value, raised its annual sales guidance after reporting a 28% slump in second-quarter core earnings.
Markets were mixed across asset classes as investors digested the tech pullback:
- S&P 500: -0.6%
- Nasdaq 100: -1%
- Dow Jones Industrial Average: -0.1%
- Bloomberg Magnificent 7 Total Return Index: -1.6%
- Russell 2000: -0.6%
In currencies, the euro rose to $1.1660 while the British pound fell to $1.3460. Bitcoin increased 0.2% to $113,799.97 and Ether rose 3.4% to $4,298.22. In commodities, West Texas Intermediate crude gained 1.6% to $63.32 per barrel, and spot gold climbed 0.9% to $3,345.23 an ounce.
