Key Takeaways
- The Nasdaq Composite on Wednesday registered its biggest percentage decline since October 2022 and its biggest points decline in more than four years, as large-cap technology stocks plunged following disappointing earnings reports.
- The route erased an estimated $985 billion off the Nasdaq market capitalization.
- Magnificent Seven stocks had their worst day on record.
The Nasdaq Composite on Wednesday suffered its worst day since October 2022 after disappointing earnings reports from Tesla (TSLA) and Alphabet (GOOGL) shook Wall Street’s confidence in the stocks that were, until recently, its brightest stars.
The Nasdaq lost 654 points, or 3.6%, on Wednesday, in its biggest one-day drop since falling almost 3.9% on October 7, 2022. In terms of points, it was the index’s worst day since March 16, 2020, the day the onset of the Covid-19 pandemic led the Federal Reserve to drop interest rates to nearly 0%.
Wednesday’s rout erased an estimated $985 billion off the market capitalization of the $27 trillion Nasdaq.Â
Mag 7 Particularly Hard Hit
The day was even worse for the Magnificent Seven, the group of tech stocks that have propelled the market to dozens to record highs this year alone. The Roundhill Magnificent Seven ETF (MAGS), an equal-weighted index of the seven companies, tumbled 6.1%, its largest drop since it began trading in April 2023.
Wednesday’s declines officially plunged the ETF into correction territory. The fund’s shares have shed 12% since July 10, the day before a soft inflation report sparked a rotation into the small-cap stocks that stand to benefit most from the interest rate cuts that Wall Street sees on the horizon.