Market Slide on Wall Street

This Sept. 3 story has been officially corrected to fix the time frame of when Nvidia (NASDAQ: NVDA) stock traded sideways and removes reference to ‘most of the last quarter,’ in paragraph 4.

(Reuters) – Wall Street’s main indexes slid on Tuesday, with the S&P 500 down more than 2% and the Nasdaq Composite down over 3% as investors softened their optimism about AI in a broad market sell-off that accelerated after tepid economic data. The benchmark S&P 500 index, Nasdaq and Dow registered their biggest daily drop since early August.

Shares of chip stocks were hard hit, with AI heavyweight Nvidia tumbling nearly 10% and Wall Street’s chip index the PHLX slumping 8%.

Investors also cited concerns about the time of year, as September is widely regarded one of the worst months for stock market performance.

Andrew Graham, Founder and Managing Partner, Jackson Square Capital, San Francisco
“Nvidia didn’t rally post-earnings, so when people came back from holidays, it seems they decided to sell it. That sounds like a weird reason to me, but that is part of the story. Also, Nvidia traded sideways for months following the release of second-quarter earnings in 2023. The sell-off hasn’t helped sentiment although it has created technical support at around $95 a share.”

“The other factor here is that all tech revolutions go through periods of disillusionment, and maybe we’re in the early stages of that with AI.”

Michael Arone, SPDR Chief Strategist, State Street Global Advisors, Boston
“Good just isn’t good enough any more when it comes to Nvidia’s earnings. There was just enough this quarter that wasn’t perfect to cause people to sell. More broadly, the S&P is up 20% as of the end of August, and this is just another excuse to take profits from tech as valuations are high and growth rates are slowing. There is skepticism that all of that AI spending will not pay off in soaring revenues and earnings.”

“Then what’s happened here is a bit of a cliché; everyone is returning from summer holidays, volumes are picking up and performance has been good entering what historically has been a seasonally weak period. September has been a losing month for stocks in each of the last four years, and in six of the last 10 years.”

“So what I expect is that we’ll see a continued rotation away from technology stocks leading the way to broader leadership. That’s happening because interest rates and inflation are both falling and that should help to close the gap in earnings growth between the technology sector and the rest of the market.”

Sam Stovall, Chief Investment Strategist, CFRA, New York
“I don’t think there was anything that caused people to sell today. I think investors just succumbed to seasonality…”

“The only thing I saw that might have undermined investors’ confidence was the ISM report. That was supposed to show a gain but actually showed a decline…”

JJ Kinahan, CEO IG North America and President of Tastytrade, Chicago
“The market drop today was obviously in some part spurred by the ISM number, which showed that manufacturing is down for the 5th month in a row…”

Carol Schleif, Chief Investment Officer, BMO Family Office in Minneapolis, Minnesota
“Sept/Oct are notoriously volatile months for markets, particularly in presidential election years…”

Todd Sohn, ETF Strategist, Strategas LLC, New York
“Such a massive amount of money has gone to tech and semiconductors in the last 12 months that the trade is completely skewed…”

Steve Sosnick, Market Strategist, Interactive Brokers, Greenwich, CT
“There’s a bit of a post-Nvidia earnings hangover going on today. Those earnings last week were fine; they exceeded expectations…”

Dennis Dick, Trader at Triple D Trading
“September is seasonally a very weak month of the year, so I think people are nervous…”

Stephen Massocca, Senior Vice President, Wedbush Securities, San Francisco
“They’re expensive. They’re not cheap stocks…”

Brian Jacobsen, Chief Economist, Annex Wealth Management, Brookfield, WI
“People are worrying and thinking about all kinds of macro issues…”

Scott Wren, Senior Global Market Strategist at Wells Fargo Investment Institute
“The market is worried about how drastic the slowdown is going to be…”

Michael Green, Portfolio Manager, Simplify, San Francisco Bay Area
“People are over allocated to Nvidia and many of these names…”

Callie Cox, Chief Market Strategist, Ritholtz Wealth Management, New York
“Stocks are starting the fall off on a sour note, yet it’s hard to say exactly why people are selling today…”

Summary: Wall Street declined sharply as AI stocks like Nvidia plunged, heightened by seasonal trends and concerns over economic data, leaving investors apprehensive about the future.