The Nasdaq 100 has officially entered correction territory, dropping 11 percent from its record high set in June. The tech-heavy index now trades at $24,443, reflecting a 1.7 percent decline on the day. Major components Nvidia, Apple and Tesla saw notable declines, with Nvidia falling 3.6 percent to $190.01 and Apple down 0.6 percent to $338.19. Meta Platforms dropped 1.3 percent to $585.61, reflecting broad weakness across the sector.
The selloff follows a period of strong gains driven by optimism around artificial intelligence and anticipated interest rate cuts. Persistent inflation concerns and a hawkish Federal Reserve have since tempered investor enthusiasm. The broader market felt the pressure as well: the S&P 500 fell 1.5 percent to $7,316 and the Dow Jones dropped 2.2 percent to $51,594, signaling a widespread re-evaluation of risk.
We maintain our overweight rating on Microsoft, despite its 0.7 percent dip to $390.54. Cloud growth and enterprise AI adoption remain underpriced at current levels. Tesla, down 3.0 percent to $298.32, faces mounting competition in the EV market and demand uncertainty in China—a cautious stance is warranted. Alphabet, up 0.9 percent to $336.71 on the day, stands out as the defensive play within tech, supported by diverse revenue streams and a resilient advertising business.
Focus on companies with strong balance sheets and clear paths to profitability, particularly those with defensible moats in AI infrastructure. The August jobs report and the next Consumer Price Index release are the key data points to watch for signs of inflation easing. Corporate earnings season begins in October; Q3 guidance from Amazon, which fell 1.8 percent to $226.65, will be a direct read on consumer spending and cloud infrastructure investment. The Federal Reserve's Sept. 18 policy meeting will offer further clarity on the interest rate trajectory that drives growth stock valuations.
