Magnificent 7 tech giants lose $700B

Markets worldwide are in turmoil as fears of an impending recession intensify. On Monday, U.S. and European stock exchanges experienced significant declines, reflecting deepening investor anxiety.

The tech sector, particularly the so-called “Magnificent seven” stocks – Apple, Alphabet, Amazon, Meta Platforms, Microsoft, Nvidia, and Tesla – faced unprecedented losses, contributing to the overall market downturn.

What’s driving the selloff?

Recession fears: Concerns over a potential recession have intensified following disappointing U.S. economic data. Despite the Federal Reserve signaling possible interest rate cuts in September, the release of weaker-than-expected employment figures and manufacturing data has spooked investors.

• Non-farm payrolls increased by just 114,000 in July, falling short of expectations.
• The unemployment rate rose to 4.3%, the highest since October 2021.
• The ISM Manufacturing PMI for July dropped to 46.8, an eight-month low, missing market forecasts.

Federal Reserve’s stance: Although the Fed hinted at a possible rate cut, market analysts worry that the central bank may have delayed its response, exacerbating the market’s volatility.

Impact on tech giants

The Magnificent seven collectively lost approximately $700 billion in market value.

• Apple: Market value dropped by $178 billion to $3.164 trillion.

Why: Significant selloffs by major investors, including Warren Buffett’s Berkshire Hathaway, contributed to the drop.

• Alphabet: Shed $74 billion, now valued at $1.999 trillion.

Why: The decline was exacerbated by a recent U.S. court ruling against Google in an antitrust case.

• Amazon: Declined by $87 billion to $1.674 trillion.

Why: Amazon Founder Jeff Bezos’s recent share sales added to the stock’s decline.

• Meta Platforms: Decreased by $41 billion to $1.2 trillion.

Why: Meta’s stock fell by about 3%, driven by concerns over its reliance on Nvidia’s delayed AI chips.

• Nvidia: Suffered the biggest loss, down $191 billion to $2.45 trillion.

Why: Nvidia saw its largest single-day drop in corporate history. The decline was triggered by a design flaw in its AI chips, delaying product releases and impacting its partners.

• Tesla: Fell by $20 billion, reducing its market value to $643 billion.

Why: Tesla shares dropped 5% amid the broader market selloff and potential delays in AI chip shipments, impacting its vehicle technology. Also, it is affected by Nvidia’s AI chip issues and shifting priorities of CEO Elon Musk.

• Microsoft: Lost $96 billion, falling to $2.94 trillion.

US indices

The Dow Jones Industrial Average, S&P 500, and Nasdaq all experienced declines exceeding 3%, marking one of the most challenging trading days in recent memory. The Nasdaq, heavily weighted with tech stocks, was particularly hard-hit.

• Dow Jones fell over 1,000 points (-2.68%) to 38,670.55
• S&P 500 dropped by 4.07% to 5,128.93
• Nasdaq tumbled 6.25% to 15,728.46

European markets follow suit

European stocks also closed the day with significant losses, mirroring the global trend.

• The Stoxx Europe 600 index dropped by 2.17% to 487.05 points.
• Key indices in the U.K. (FTSE 100), France (CAC 40), Germany (DAX 40), and Italy (FTSE MIB 30) all saw declines ranging from 1.42% to 2.27%.

Looking ahead

Investors remain on edge as the global economic outlook darkens. The Federal Reserve’s next moves will be closely watched, with markets hoping for decisive action to stabilize the situation.