Wall Street falls. S&P500 down for the third time in a row

The beginning of the week brought a continuation of the correction on the New York stock exchanges. Technology companies were again the leaders of declines, and the S&P500 index ended lower for the third session in a row.

The Nasdaq Composite lost 0.86% on Monday and finished with a score of 22,708.07 points. The S&P500 dropped by 0.92% and closed at 6,672.41 points. Dow Jones gave up 1.18% and ended the session at 46,590.24 points. Although the VIX volatility index increased by almost 13%, it still remained at a relatively flat level of 22.38 points.

The tone of Monday's session was again set by falling prices of highly valued technology companies. Nvidia shares fell nearly 2% after rising 1.8% on Friday and falling 3.6% on Thursday. After Wednesday's session, the AI ​​industry leader will present results for the previous fiscal quarter.

Additionally, Apple's shares were devalued by 1.8%, AMD's by 2.6%, Meta's by 1.2%, and Palantir's by 1.6%. All these assets managed to significantly reduce losses in the last minutes of trading. Such large fluctuations in technology companies valued at trillions of dollars indicate a change in investor sentiment. These values ​​have been cherished for the previous three years, but for several weeks the extremely high valuations of big tech have been questioned. Increasingly, companies related to generative artificial intelligence are being talked about and written about as speculative bubbles.

Additionally, companies with high multiple valuations (e.g. Palantir's p/z is 396) are harmed by doubts regarding the December decision of the Federal Reserve. Just a month ago, the market was 95% convinced that the Fed would cut rates by 25 bp in December. Now the chances of such a scenario are estimated at 42% – according to FedWatch Tool calculations.

In this context, Berkshire Hathaway's recent moves are intriguing. At the end of Warren Buffett's reign, the investment conglomerate decided to sell part of its shares in Apple and buy the shares of the Google owner for $4.3 billion. Alphabet shares are up more than 3% today.

On Monday, apart from Google, all the largest companies and almost all market sectors were in red. The sell-off was therefore not limited only to technology companies. Only defensive utility companies performed this well, which indicates investors' growing concerns about the state of the US economy. This week, government statistical agencies will start publishing macro data, with the overdue labor market report at the forefront (on Thursday).

But perhaps the most bizarre fact is that although the popular sentiment indicator by CNN indicates “extreme fear”, the New York indexes are only a few percent below the historic highs set at the end of October. So just a few weeks ago. Usually, such bad moods appear only at the bottom of a correction or even a bear market.

K.K

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