Nasdaq Plummets Amid Tech Earnings Concerns and Economic Slowdown

The Nasdaq Composite Index has dropped 10% from its early July peak due to weak tech earnings and fears of a slowing U.S. economy. Disappointing reports from Amazon and Intel, coupled with a softer-than-expected jobs report, have heightened concerns about Federal Reserve rate cuts. Historically, the index has experienced corrections 24 times in the past 44 years.

The Nasdaq Composite Index faced a sharp decline on Friday, tumbling 10% from its early July peak, driven by weaker-than-expected tech earnings and rising concerns over a slowing U.S. economy. The index fell around 3% following a disappointing jobs report, which amplified worries that the Federal Reserve might implement significant rate cuts to stave off recession.

Notably, subpar earnings from tech giants Amazon and Intel further rattled investors, pushing the Nasdaq down 10.4% from its July 10 record close of 18,647.45 points. A correction, typically recognized when an index falls more than 10% from its high, seems to be underway. Tom Plumb, CEO and portfolio manager at Plumb Funds, commented, "This is an old-fashioned correction going on."

Over the past 44 years, the Nasdaq has entered correction territory following a new high 24 times, or roughly once every two years. Despite the recent slide, the Nasdaq remains up 12% year-to-date. The S&P 500, currently down 6% from its peak, also shows a 12% gain this year. Investors' cautious approach towards high-valued tech stocks, amid weak earnings reports from both Tesla and Alphabet, reflects broader economic concerns.

JJ Kinahan, CEO of IG North America and President of tastytrade, remarked, "The focus of the market is no longer simply about earnings, but instead, what earnings are saying about the economy overall." He added that surging bond prices and declining yields signal a quest for safer investments, indicating global economic slowdown fears.

(With inputs from agencies.)