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US tech stocks led a sharp Wall Street sell-off on Wednesday after overnight results from index heavyweights Tesla and Alphabet left investors disappointed.
The Nasdaq Composite fell more than 2 per cent shortly after the opening bell in New York, with Google parent Alphabet down 4.7 per cent despite narrowly beating analysts’ revenue forecasts. Tesla sank 10 per cent after profits fell well short of expectations, leaving the electric vehicle maker on course for its biggest one-day decline since late January.
Wednesday’s move means the tech-heavy index is now 5.4 per cent below its 52-week high on July 11, when cooler than forecast US inflation triggered a rotation out of the artificial intelligence-adjacent big tech stocks, which have driven the vast majority of the market’s recent gains.
Alphabet and Tesla’s results “disappointed versus expectations” and will “feed concerns” that the broader market has become too reliant on the Magnificent Seven, said Charlie McElligott, an analyst at Nomura. “Risk sentiment remains fragile,” he added.
All of the Magnificent Seven megacap tech stocks were lower in morning trade in New York, with Nvidia down 3.3 per cent, Apple losing 1.9 per cent and Meta off 3.4 per cent. Wall Street’s blue-chip S&P 500 fell 1.4 per cent, while the Russell 2000 index of smaller companies fell 0.5 per cent.
Wednesday’s sell-off comes as “the macro picture appears to be cracking”, said JPMorgan analysts in a note to clients on Monday, who highlighted weakening business activity data and a housing market that continues “to crumble”. Data released last week showed the number of Americans remaining on unemployment aid hit the highest level since 2021.
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