Market Recap: Tech Weakness Drags S&P 500 and Nasdaq Lower

The tech sector faced a setback on Friday as weakness in technology shares caused the S&P 500 and Nasdaq to dip slightly. The main culprit was Nvidia, whose shares fell more than 3%, dragging down both indexes along with the rest of the tech sector.

Despite this decline, Nvidia has still seen a remarkable 155% increase in value so far this year, thanks in part to a rally in AI-related stocks that has pushed both indexes to new record highs in recent days. However, in just two days, Nvidia lost more than $220 billion in value, with Apple also experiencing a drop.

While the Dow Jones Industrial Average managed a modest 0.04% gain, the S&P 500 and Nasdaq Composite experienced losses of 0.16% and 0.18% respectively. The Dow did end the week with a 1.44% increase, its largest weekly gain since mid-May.

Markets have been driven by gains in AI-related stocks like Nvidia since the end of 2023, but analysts are starting to question whether these valuations are sustainable. Nvidia’s market value now exceeds that of tech giants like Microsoft and Apple, having more than tripled over the past year.

In addition to these market shifts, the dollar reached its highest point since early May as US business activity saw a significant increase in June, coupled with a rebound in employment. The easing of price pressures also suggests that the recent slowdown in inflation may continue.

Friday also marked the occurrence of triple witching, where stock options, stock index options, and stock index futures all expired simultaneously. This led to a surge in trading volume at the close of the market, with an estimated $5.5 trillion expiring during the event.

As markets look towards the second half of 2024 and the Federal Reserve’s next steps, investors are bracing for potential changes in the landscape of the tech sector and beyond.