Stocks Plunge as Nvidia’s Share Price Takes a Hit, Signaling Troubling Times Ahead for US Equities

New York, USA – Nvidia’s stocks experienced a significant drop of 10% on Friday, marking the worst performance for US stock markets in quite some time. This decline came as investors opted for safer options and steered away from risky assets ahead of a wave of upcoming Big Tech earnings reports. The chipmaker endured its weakest session since March 2020, losing over $200 billion in market value in just one day. This downfall was responsible for approximately half of the 0.9% decrease observed in Wall Street’s S&P 500, as per Bloomberg data.

A day after Netflix revealed its decision to stop regularly disclosing its subscriber numbers, its shares plummeted by about 9%, overshadowing better-than-expected earnings results. Consequently, the tech-heavy Nasdaq Composite saw a 2.1% decline. Stocks like Advanced Micro Devices, Micron Technology, and Meta, which had been thriving on investor interest in artificial intelligence, also suffered losses, closing down by 5.4%, 4.6%, and 4.1% respectively. Super Micro Computer, a group focused on server equipment and perceived as a beneficiary of the AI trend, dropped by 23%.

Investors have been grappling with concerns over the US Federal Reserve potentially making minimal interest rate cuts or none at all this year. Additionally, heightened anxiety stemming from retaliatory actions between Iran and Israel has added to market unease. Analysts note that the Friday sell-off was largely due to investors repositioning their portfolios hastily in anticipation of Big Tech earnings releases.

The upcoming week will see reports from Microsoft, Alphabet, and Meta for the first quarter, with Nvidia’s results expected in late May. These companies are anticipated to have performed well, but they face challenging year-on-year comparisons. Earnings per share growth for major tech companies peaked at 68.2% in the fourth quarter of 2023, with UBS analysts projecting a 42.1% growth for the first quarter of this year.

Wall Street’s S&P 500 index wrapped up its worst week in over five months, registering a 0.9% decline on Friday alone. The index has been on a downward trend since the previous week, experiencing its most extended negative streak in a year and a half. As noted by Mike Zigmont, head of trading at Harvest Volatility Management, the usual dip-buyers seemed hesitant, potentially overwhelmed by the market conditions. Oil prices saw a slight increase while the dollar index remained steady throughout the day.