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October 25 witnessed a significant drop in the value of prominent tech companies, erasing more than $280 billion in market capitalization. This substantial decline has reignited concerns regarding a potential tech downturn.
The seven leading tech corporations, often recognized as the core driving forces of the S&P 500 index, experienced this decline. These companies include Alphabet, Amazon, Apple, Meta, Microsoft, Nvidia, and Tesla. Collectively, they account for one-fourth of the S&P 500's total value.
Alphabet, the parent entity of Google, experienced a significant hit, with its shares plummeting by over 9%, eliminating $180 billion from its valuation. This marked Google's most challenging trading day since the onset of the COVID-19 pandemic in March 2020. Amazon, Nvidia, and Meta weren't spared either, witnessing declines of 6%, 4%, and 4% in their share values, based on data from Y Charts.
In comparison, Apple and Tesla's downturn was milder, registering a decrease of 1.4% and 2%. Interestingly, Microsoft stood out, witnessing a 3% rise in its share price, likely a result of its thriving Azure business segment showing impressive growth figures.
Market observers, including those from The Kobeissi Letter, underscored the intensity of this tech slump, emphasizing its contribution to the S&P 500's drop to a five-month low. They highlighted the consequences when dominant stocks, crucial to the market's stability, experience a downturn. Furthermore, the increased caution and hesitance from buyers were underscored by Kobeissi, hinting at potential challenges ahead.
Recently, terms like "stock market crash" have gained traction in online search queries, as pointed out by Andrew Lokenauth of TheFinanceNewsletter.com. On the flip side, the cryptocurrency domain has been riding a wave of positivity. In the last week alone, the crypto market cap surged by 16% to touch the $1.3 trillion mark, based on insights from CoinGecko.
However, one must approach this with caution. For instance, during the two quarters in 2022 when the U.S. real gross domestic product faced a dip, the crypto market cap witnessed a significant 62% drop.
Multidisciplinary Digital Publishing Institute's research has previously indicated that, due to its volatile nature, Bitcoin often mirrors tech stocks' trading patterns. Yet, Bitcoin has been gradually distancing itself from the Nasdaq 100. From September 1, Bitcoin's value surged by 34% while the Nasdaq dipped by 9%.
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