Economic concerns and a disappointing outlook from chip giant Broadcom
weighed heavily on the US stock markets on Friday. Technology stocks, which had already plummeted on Tuesday, were once again hit particularly hard.
The technology-heavy Nasdaq 100 lost 2.7 percent to 18,421 points on Friday. On a weekly basis, this results in a loss of almost 6 percent. It is the biggest weekly loss since November 2022. It is still 2.5 percent away from its interim low of 18,000 points, which it reached at the beginning of August: the stock markets, especially the highly valued tech stocks, are threatened with a stormy autumn.
The leading index Dow Jones Industrial fell by 1.01 to 40,345 points after reaching a record high of 41,585 points a week ago. For Wall Street’s price barometer, this means a weekly and monthly decline of almost 3 percent. September is considered a bad month for the stock market.
The market-wide S&P 500 fell 1.73 percent on Friday. Its weekly decline of more than four percent is the largest since March 2023.
High valuations meet a weakening economy
The fact that the situation on the labor market has continued to weaken has caused uncertainty. On the other hand, tech stocks as a whole are currently being critically examined to see whether they can actually achieve the expected profits in the near future, wrote Robert Halver, head of capital market analysis at Baader Bank. High valuations, sometimes astronomical sales and profits of companies with a business focus on artificial intelligence (AI) literally invite profit-taking as nervousness increases.
Fed is only expected to cut interest rates by 0.25 percent in September
Because the economy created fewer jobs in August than expected. “Overall, the labor market is in a stable condition, although the momentum is trending down,” said expert Ulrich Wortberg from the Landesbank Hessen-Thüringen. In his opinion, this supports the expectation that the Fed will be able to cut interest rates in mid-September. However, there are no arguments for a big step of 0.50 percentage points, which some consider possible.
After the publication of the data, US Federal Reserve Director Christopher Waller was at least open to a larger cut in key interest rates. It is important that the Fed start cutting interest rates this month. He is “open” to a deeper interest rate cut – but that puts Waller in the minority on the Fed’s board.
Broadcom, Nvidia and Tesla under pressure
Shares of Broadcom fell more than 10 percent as the bottom of the Nasdaq 100. It was said on the market that the classic business with chips outside of AI applications was disappointing in the past quarter. Broadcom is one of investors’ favorites for artificial intelligence – a trending topic that has received a lot of fantasy pricing in recent months.
Recently, however, the hype died down, which was also noticeable in other stocks from this environment in the past few months. The shares of the AI pioneer and stock market darling Nvidia fell a further 4 percent on Friday and lost around 15 percent in value within five trading days. The share of Microsoft kept its weekly losses in check at 3.5 percent, but has also lost around 15 percent since its record high at the beginning of July. The share of Tesla, which has been fluctuating heavily for months, fell by 9 percent on Friday alone.
Euro slightly weaker against the dollar
The euro fell slightly overall and was last traded at 1.1088 US dollars. The European Central Bank had set the reference rate at 1.1103 (Thursday: 1.1097) dollars. The dollar therefore cost 0.9006 (0.9011) euros.
Dax is slipping again in the wake of the Nasdaq
The Dax also slipped further on Friday under the impression of the very weak US technology sector. The leading German index ended Xetra trading (6:30 p.m.) with a discount of 1.5 percent to 18,301 points, but then fell further in late trading and is in danger of slipping below the 18,200 point mark at the start of trading on Monday. On a weekly basis it lost 3.2 percent. The MDax of medium-sized stock exchange companies lost 1.23 percent to 25,046.52 points on Friday
After the DAX record high of 18,990 points on Tuesday, gloomy US economic data had already triggered profit-taking in the DAX. The stock market barometer has now lost more than a third of its almost 2,000-point recovery since the price collapse at the beginning of August.
Bitcoin collapses again and is trading at a 6-month low
In addition to the tech stocks, the cryptocurrency Bitcoin also came under heavy pressure. The cyber currency lost more than 15 percent of its value over the week and fell below the $55,000 mark on Friday. This is the lowest level in six months.
Oil prices hardly changed
Oil prices recovered somewhat on Friday from significant losses over the course of the week. A barrel (159 liters) of North Sea Brent for delivery in November cost 73.14 US dollars in the morning, 45 cents more than the day before. The price for a barrel of US West Texas Intermediate (WTI) for delivery in October rose 49 cents to $69.64.
Despite the slight increase, crude oil has become noticeably cheaper on the world market since Monday. This means that prices have fallen significantly for the second trading week in a row. Over the course of the two weeks of trading, the price of Brent oil from the North Sea fell by around eight dollars per barrel. A key reason for the price slide is concern about low demand after economic data from the USA and China partly disappointed.