The Nasdaq Composite dropped for a second day Thursday as Wall Street continued its rotation out of technology stocks.
The Nasdaq Composite fell 1.5%, while the S&P 500 declined 0.6%. The Dow Jones Industrial Average rose 130 points. The Russell 2000 gained 1% as investors continued their rotation into small caps.
Investors ditched some of 2024′s winning tech names for a second day, dragging down the S&P 500′s information technology 2%. Communication services dropped 1.3%. Nvidia slumped 6%, while Super Micro Computer declined about 5%. The VanEck Semiconductor ETF shed 3.6%. Megacap stocks Meta Platforms, Microsoft and Alphabet fell 2% each.
Investors also assessed a second-quarter GDP report that showed the economy grow 2.8%, and much more than expected. Economists surveyed by Dow Jones had anticipated growth of 2.1%.
Wednesday’s trading session saw intense declines for the S&P 500 and the Nasdaq Composite, driven by disappointing quarterly reports from Alphabet and Tesla. Both the broad-market index and the tech-heavy benchmark posted their worst session since 2022, while the Dow shed roughly 504 points.
Investors have come to view the recent declines as a sign of an overdue correction in an overbought market, which is now seeing a rotation away from megacap tech into small-cap stocks and more cyclical areas.
Truist’s Keith Lerner believes there is more room to run in this corrective phase, despite a favorable view toward the tech sector.
“This choppier market action of late is consistent with our expectations and is set to continue,” he said in a note to clients. “Our base case is that the longer-term bull market remains intact, but it’s often two steps forward, one step back.”
Ford Motor shares tumbled 16% after the company’s second-quarter earnings came in much lower than analysts expected. Chipotle slipped 3% despite topping earnings and revenue expectations, while ServiceNow popped 11% on stronger-than-expected earnings.
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