A sharp decline in megacap technology stocks on Wednesday broadened, pulling in some blue-chip firms and small-cap companies.
The S&P 500 tumbled 1.6%, putting it on track for its largest one-day percentage decline since September, according to Dow Jones Market Data. The Nasdaq Composite down more than 2.5%, while the Dow was off 0.9% and the small-cap Russell 2000 index was 0.5% lower, according to FactSet data.
A disappointing start to the Big Tech earnings season sparked concerns that AI optimism powering stock-market gains was fading.
“We need to remember that very few companies have reported [earnings] so far, so we shouldn’t make any sweeping statements about earnings,” said Nanette Abuhoff Jacobson, global investment strategist at Hartford Funds. “That said, when I look at earnings expectations for tech relative to the rest of the market, I’m expecting over the next couple of quarters, the tech earnings could moderate and the rest of the market could accelerate.”
There could be “room for disappointment” in terms of expectations on the tech earnings, Abuhoff Jacobson told MarketWatch. While tech looks unique in terms of being somewhat “insulated both from the economic cycle and from the political cycle,” there also could be a lot more dispersion in those names and in that group, she said.