‘Magnificent seven’ tech stocks tumble a whopping $280B as crypto surges
More than $280 billion has been wiped from the “magnificent seven” tech stocks following the release of several earnings reports on Oct. 25, triggering fears of a looming tech recession.
The so-called “magnificent seven” refers to the top seven blue-chip tech firms — Apple, Microsoft, Meta, Amazon, Alphabet, Nvidia and Tesla — which combine to make up a quarter of the value of the S&P 500 index.
Google parent company Alphabet saw its share price fall over 9%, wiping $180 billion from its market cap. It was noted as Google’s worst-performing day since the COVID-19 pandemic hit in March 2020.
The share prices of Amazon, Nvidia and Meta fell 5.5%, 4.3% and 4.2%, respectively, according to Y Charts.
Apple and Tesla’s fall in share prices was less severe, at 1.35% and 1.9%, respectively, while Microsoft was the only one of the seven to buck the trend, with its share price rising 3.1% after reporting better-than-expected growth in its Azure business.
“This is the most widespread tech selloff in months which has resulted in a 5-month low for the S&P 500,” The Kobeissi Letter said.
“This is what happens when the few stocks that are holding up the entire market break,” the firm said, adding that tech stock investors may be beginning to price-in a recession.
“It seems like buyers are becoming more hesitant as headwinds accumulate,” Kobeissi noted in a follow-up response.
Fears of a “stock market crash” have also been reflected in Google search trends, with the three-word term up 233% over the last week, noted Andrew Lokenauth, a reporter for TheFinanceNewsletter.com.
Google searches for Stock market crash up 233% in past week.
If the stock market crashed 10%, what stocks are you investing in? pic.twitter.com/TQz8tVyL5U
— Andrew Lokenauth | TheFinanceNewsletter.com (@FluentInFinance) October 24, 2023
Meanwhile, the cryptocurrency market has been trending upward amid optimism over possible spot Bitcoin exchange-trade fund approvals in the United States, with market cap increasing 16.3% to $1.3 trillion over the last week, according to CoinGecko.
Bitcoin (BTC), Ether (ETH), BNB (BNB) and XRP (XRP), in particular, have increased 23.3%, 16.7%, 8% and 15.2%, respectively, over the last seven days.
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However, the crypto market hasn’t proven to be bulletproof in the face of tough macroeconomic conditions.
When the real gross domestic product of the United States decreased over the first two quarters of 2022, the cryptocurrency market cap fell 61.7% from $2.37 trillion to $907 billion, according to CoinGecko.
While analysts speculate whether Bitcoin will decouple further from tech stocks and the S&P 500, past research from the Multidisciplinary Digital Publishing Institute suggests Bitcoin still tends to trade like a “tech stock” over the long term due to its extreme volatility.
It can, however, serve as a viable hedge against the U.S. dollar, which it’s negatively correlated to, the research firm deduced from an October 2022 report.
Since Sept. 1, Bitcoin has decoupled from the Nasdaq 100, increasing 34%, while the Nasdaq has fallen 8.6% over the same time frame.
Meanwhile, the recent investor movements have some observers hinting that the movement could be seen as a “flight to safety” toward Bitcoin, particularly in light of several banking stocks plummeting lately.
It’s almost like I predicted that #crypto would decouple from stocks. And here we are with tech #stocks sinking and #bitcoin rallying. https://t.co/K1R3OIiOgV
— Bryan Ross (@bryanrosswins) October 25, 2023
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