The Nasdaq 100 tumbled to its lowest point since November, dragged down by a significant sell-off in influential tech stocks. Nvidia’s earnings, while positive, failed to reignite the artificial intelligence rally and further fueled the decline. The broader market also suffered, with the S&P 500 shedding 1.6% and erasing its gains for 2025.
Megacap stocks bore the brunt of the selling pressure, as Nvidia’s results, while meeting expectations, fell short of sparking renewed enthusiasm for AI-related investments. The chipmaker’s shares plummeted 8.5%. Adding to the market’s woes, former President Trump’s announcement of impending tariffs on Canada, Mexico, and China further strengthened the dollar.
Matt Maley, an analyst at Miller Tabak + Co., commented, “Nvidia’s earnings were solid, but they didn’t alleviate concerns that profits from the AI sector might not be as robust as initially anticipated.” He added that political pronouncements from Washington continue to trigger significant intraday market fluctuations.
The uncertainty surrounding the potential impact of US tariffs on trade, economic growth, inflation, and geopolitical stability kept investors on edge. Thursday’s economic data offered little respite, revealing a healthy but potentially overheating economy with persistent inflation.
Fourth-quarter GDP figures confirmed a 2.3% annualized growth rate, driven primarily by a 4.2% surge in consumer spending. This robust economic activity, coupled with stubbornly high inflation, raises concerns about the Federal Reserve’s future monetary policy decisions. Bret Kenwell, an analyst at eToro, observed, “Investors desire lower interest rates, but not at the expense of a significant economic downturn. At the very least, if economic growth slows, investors will expect to see a corresponding decline in inflation.”
The Nasdaq 100 experienced a sharp 2.8% drop, while the Dow Jones Industrial Average slid 0.45%. A gauge tracking the performance of the “Magnificent Seven” megacaps sank 3%, and the Russell 2000 declined 1.6%. After market hours, Dell Technologies Inc. issued a bullish outlook, offering a glimmer of hope amidst the widespread negativity.
The yield on 10-year Treasuries edged up two basis points to 4.27%. The Bloomberg Dollar Spot Index gained 0.6%. The American Association of Individual Investors’ latest Sentiment Survey indicated a rise in pessimism among individual investors regarding the short-term prospects for the stock market.
In summary, the market grappled with a confluence of negative factors, including disappointing tech earnings, tariff anxieties, and persistent inflation concerns. These pressures culminated in a broad sell-off, pushing major indices to significant lows and raising questions about the market’s near-term trajectory.
