What happened
U.S. stocks suffered their worst day in more than 18 months yesterday after lackluster results from Tesla and Google owner Alphabet fueled fears over the high valuations of large technology companies.
Who said what
Losses in both the S&P 500, which dropped 2.3%, and Nasdaq Composite, which fell 3.6%, were largely "driven by big tech stocks" including Nvidia, Microsoft, Apple and Tesla, said the Financial Times. Tech — and artificial intelligence stocks in particular — has "driven the bulk of market gains this year."
Tesla reporting a 45% drop in profits for the spring and Alphabet's fall of 5% could "feed concerns” that the broader market has become too reliant on the so-called "magnificent seven" technology stocks, said Charlie McElligott, an analyst at Nomura, to the Times.
What next?
Analysts have questioned whether the companies that have been responsible for the majority of the S&P 500's record run this year are now too expensive. Some investors are "moving their money away from Big Tech to smaller companies," said The Telegraph. Asian shares dropped in morning trading today.
The Week
Escape your echo chamber. Get the facts behind the news, plus analysis from multiple perspectives.
Sign up for The Week's Free Newsletters
From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.
From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.