The NASDAQ 100 has plunged over 10% since late January, driven by heightened concerns around AI-related companies and geopolitical tensions in the Persian Gulf. As of Friday, major indices are down more than 1%, with the Russell 2000 suffering losses nearing 2%. This downturn is compounded by negative signals from tech firms and a bleak outlook on inflation and central bank policies, as indicated by recent macroeconomic data from the University of Michigan.
Consumer sentiment has sharply declined, with inflation expectations rising to 3.8% for the next year, well above forecasts. This shift in consumer outlook is affecting tech stocks, as evidenced by significant drops in companies like Meta and Microsoft, both grappling with legal challenges and operational cutbacks. Palo Alto Networks is also feeling pressure from AI’s potential impact on business models, leading to a 7% decline in shares.
Market professionals should be wary of the ongoing bearish momentum, particularly in tech, as the NASDAQ struggles to maintain critical support levels. The combination of geopolitical instability and rising inflation expectations could lead to further volatility across sectors.
Source: xtb.com