Markets Wrap: ‘Mag Seven’ Faces Crushing Losses Before Next Week’s Results

In a recent development, equities experienced a continued decline from their record levels, with the S&P 500 dropping below 5,000 and the Nasdaq 100 falling over 2%. Investors are now eagerly awaiting earnings reports from the tech megacaps, also known as the “Magnificent Seven,” to see if they will meet the high expectations surrounding artificial intelligence. The market saw a notable setback on Friday as two AI companies, Nvidia Corp. and Super Micro Computer Inc., saw their stocks plummet by at least 10%.

Profits for the top seven growth companies in the S&P 500, including Apple Inc., Microsoft Corp., Alphabet Inc., Amazon.com Inc., Nvidia, Meta Platforms Inc., and Tesla Inc., are expected to surge by 38% in the first quarter. However, excluding these companies, the rest of the index’s profits are projected to decrease by 3.9%. Investors are looking not only for strong earnings but also strong guidance from these tech giants. Any disappointment in their reports could lead to further market decline.

The stock market witnessed its sixth consecutive drop, the longest losing streak since October 2022. Nvidia’s decline erased over $200 billion in market value, while the Nasdaq 100 had its worst day of the year. Meanwhile, Treasury 10-year yields slightly declined, and oil prices showed minimal gains following developments in the Middle East. The recent pullback in the market was attributed to concerns raised by Taiwan Semiconductor Manufacturing Co. and ASML Holding NV about the chip market’s outlook.

Amidst all these developments, geopolitical tensions, inflation concerns, and hawkish Fed sentiments have influenced market sentiment. Traders are approaching the market cautiously, and investors are withdrawing money from equities amid fears of prolonged high interest rates by the Fed. Despite the recent market retreat, some experts believe it presents an opportunity for investors to enter the market, given the strong earnings growth and positive economic momentum expected in the near future.