Stock market today, the stock market faced a downturn, with both the Nasdaq and S&P 500 indices experiencing declines, particularly Nvidia (NVDA) and Microsoft (MSFT).
The Nasdaq Composite fell sharply by 1.21%, losing 237.08 points to close at 19,286.93, marking its third consecutive day of declines and its fourth drop exceeding 1% this month. The S&P 500 also slid, dropping 0.5% or 29.88 points to 5,983.25, breaching the psychologically significant 6,000 level. In contrast, the Dow Jones Industrial Average eked out a slight gain of 33.19 points, or 0.08%, finishing at 43,461.21. This mixed performance underscores the heavy influence of technology stocks on the broader market, with the tech-heavy Nasdaq bearing the brunt of the sell-off.
NVIDIA, a cornerstone of the AI revolution, saw its stock decline by 3.1% as investors grew jittery ahead of its quarterly earnings report due on Wednesday, February 26, 2025. The chipmaker’s drop follows a 4% loss the previous Friday, reflecting mounting anxiety over the demand for its expensive AI chips. Reports of competitive pressures from low-cost AI models, such as those developed by Chinese startup DeepSeek since January, have fueled speculation that the AI spending boom might be cooling. Meanwhile, Microsoft’s stock also dipped, contributing to the tech sector’s woes after news emerged that the company had canceled leases for substantial AI data center capacity in the U.S. While Microsoft reiterated its $80 billion AI and cloud investment plan for the fiscal year, its acknowledgment of potential “strategic pacing or adjustments” in infrastructure spending added to investor uncertainty.
The retreat wasn’t limited to NVIDIA and Microsoft. Other members of the “Magnificent Seven” megacap tech group—Amazon, Alphabet, Meta Platforms, and Tesla—also saw declines, with Broadcom dropping nearly 5%. Hedge funds have reportedly reduced their net exposure to these stocks to the lowest level since April 2023, signaling a shift in sentiment. This pullback comes as the market anticipates NVIDIA’s earnings as a litmus test for the AI sector’s health, with concerns growing over whether the hefty investments in AI infrastructure will continue to yield returns amid emerging cost-effective alternatives.
The day’s market movements were compounded by mixed economic signals. Consumer sentiment plummeted to 64.7 in February, according to the University of Michigan survey, its lowest since November 2023, driven by fears of tariffs and a rising 5-year inflation outlook of 3.5%—the highest since 1995. Existing home sales also disappointed, falling to 4.08 million units, below forecasts, as high mortgage rates and prices deterred buyers. These factors nudged investors toward bonds, with the 10-year Treasury yield slipping to 4.43% from 4.50%, reflecting a cautious stance amid equity market volatility.
While tech faltered, some defensive sectors showed resilience. Consumer staples like Procter & Gamble and General Mills gained ground, up 1.8% and over 3%, respectively, as investors sought safety. The Dow’s slight rise was bolstered by strength in non-tech components, contrasting with the Nasdaq and S&P 500’s tech-driven declines. However, the broader market mood remained subdued, with declining issues outnumbering advancers on both the NYSE and Nasdaq, and trading volume aligning with recent averages at 15.32 billion shares.
Geopolitical tensions added another layer of complexity, with President Trump’s calls for investment restrictions on Chinese firms contributing to a 10% plunge in Alibaba’s stock. This development heightened concerns about U.S.-China trade relations, potentially impacting tech supply chains. Meanwhile, the focus on NVIDIA’s upcoming earnings intensified, as investors look for clues about AI demand and the company’s ability to maintain its growth trajectory amidst competitive and economic headwinds.
The stock market’s performance today sets the stage for a pivotal week, with NVIDIA’s earnings poised to influence tech sentiment significantly. The interplay of economic data, corporate earnings, and geopolitical developments will likely keep volatility elevated. As the Nasdaq and S&P 500 slide, driven by dips in NVIDIA and Microsoft, investors are left questioning whether the AI-fueled rally can regain momentum or if a broader reassessment of tech valuations is underway. For now, the Dow’s resilience offers a sliver of stability in an otherwise choppy market landscape.
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