Nvidia Stock Leads Tech Decline, Causing S&P 500's Third Straight Losing Week

Nvidia stock plunged 10% to $761 on Friday, leading a broader decline in tech stocks that resulted in the S&P 500 suffering its third consecutive weekly loss. The tech-heavy Nasdaq Composite had its most challenging week since 2022, with AI and chip stocks being the biggest losers.

Nvidia, the top AI-chip maker and ultimate AI stock, fell sharply below key support levels, about 22% off its March 8 high of $974. The stock sank 10% below its 10-week moving average, a clear sell signal. Super Micro Computer, an AI server maker, also crashed after not releasing preliminary results, raising concerns about AI demand.

The S&P 500 dropped 0.9% to close out the week, while the Nasdaq Composite fell 2%. Several tech stocks that had been market leaders saw significant declines, with the tech sector in the S&P 500 broadly losing 7.3%, its worst performance since March 2020.

Why this matters: The market's decline was driven by growing acknowledgment that interest rates may remain high for longer, as top Federal Reserve officials signaled they could hold rates at their current high level, disappointing traders who had expected rate cuts this year. The prospect of prolonged high rates has put pressure on tech stocks and the broader market.

Despite the overall market weakness, some non-tech stocks like American Express and Fifth Third Bancorp reported stronger-than-expected profits, helping to limit the losses. Investors are now closely watching upcoming earnings reports from major tech companies like Microsoft, Meta Platforms, Google, and Tesla, which will have a significant impact on their sectors and the overall market.

"The market environment is decidedly weak, and investors should be largely in cash waiting for renewed signs of strength," said a market analyst, commenting on the current market conditions. With sentiment in the AI sector moving stocks in unison, it remains to be seen if the current sell-off is meaningful or a temporary setback for the high-flying tech stocks that have led the market rally this year.

Key Takeaways

• Nvidia stock plunged 10% to $761, leading a broader tech stock decline.
• The Nasdaq Composite had its most challenging week since 2022, with AI and chip stocks suffering.
• The S&P 500 dropped 0.9%, with the tech sector losing 7.3%, its worst performance since 2020.
• The market decline was driven by expectations of prolonged high interest rates, pressuring tech stocks.
• Investors are closely watching upcoming earnings reports from major tech companies for market impact.