Major tech stocks retreated Friday as concerns over slowing earnings growth and rising valuations sparked a broad-based sell-off, with the Nasdaq Composite closing 2.3% lower. The downturn followed a series of mixed earnings reports from industry leaders, fueling renewed skepticism about long-term growth prospects.
- Nasdaq Composite closed 2.3% lower at 17,841
- Apple (AAPL) reported 1.8% revenue decline and 6.4% drop in iPhone unit sales
- Microsoft (MSFT) cloud growth slowed to 11.2% YoY
- Nvidia (NVDA) shares fell 5.3% despite strong guidance
- Russell 2000 Technology Index dropped 3.8%
- 10-year Treasury yield rose to 4.68%
Investor sentiment in the technology sector took a sharp turn downward Friday, with the Nasdaq Composite Index falling 2.3% to close at 17,841, marking its worst single-day performance since October. The selloff was driven by a wave of negative sentiment following earnings releases from several key firms, including Apple (AAPL), which reported a 1.8% decline in quarterly revenue and a 6.4% drop in iPhone unit sales, below analyst expectations. Similarly, Microsoft (MSFT) saw its cloud division growth slow to 11.2% year-over-year, down from 15.6% in the prior quarter, contributing to a 4.1% decline in its share price. The broader tech index’s performance underscores growing unease about sustainability in high-valuation stocks, particularly in AI-related names. Nvidia (NVDA), despite strong guidance, saw its shares drop 5.3% after its second-quarter revenue forecast missed estimates by 3.7%, a notable divergence from its previously dominant momentum. The sell-off extended to smaller-cap tech firms, with the Russell 2000 Technology Index shedding 3.8%, reflecting a broad-based retreat from riskier growth assets. Market analysts point to rising interest rates and a stronger U.S. dollar as additional pressure points, with the 10-year Treasury yield climbing to 4.68%, the highest level in over a year. This environment increases the discount rate applied to future earnings, disproportionately affecting long-duration tech stocks. The S&P 500 Information Technology Sector Index dropped 2.9%, the largest one-day loss in three months, while the tech-heavy FANG+ index declined by 3.5%. The downturn has implications for mutual funds and ETFs with heavy tech exposure, including the Invesco QQQ Trust (QQQ), which fell 2.6% on the day. Institutional investors are now reassessing allocation strategies, with some shifting toward higher-dividend sectors such as utilities and consumer staples in anticipation of continued volatility.