The markets endured a difficult week last week, as most of the main indexes were down. The Nasdaq Composite was the toughest hit, dropping 5.5% to shut the week at 15,282, while the large-cap S&P 500 fell 3% to shut below 5,000 at 4,967.
Only the Dow Jones Industrial Average had a positive week, rising three points to 37,986 on the closing bell on Friday. The small-cap Russell 2000 was off 2.7% to 1,948.
What caused the sell-off?
A major reason why the markets fell last week was on account of a serious sell-off within the Magnificent Seven stock NVIDIA (NASDAQ:NVDA), which plunged 10% on Friday alone and 13.6% for all the week.
The semiconductor stock has been leading the market over the past 12 months and a half, fueled by its artificial intelligence-enabled chips. Last 12 months it was up 239%, and in 2024, it has already soared 58% 12 months up to now, including last week’s sell-off.
There was really no direct catalyst that brought NVIDIA down; somewhat, it was more related to a different AI-fueled stock, Super Micro Computer (NASDAQ:SMCI). The corporate builds servers and provides storage for high-performance computing and AI data centers.
Supermicro, as the corporate known as, crashed 23% on Friday after it didn’t pre-release its fiscal-Q3 revenue results, because it typically has done lately during its massive run-up. That call has led many investors to imagine the corporate’s results is probably not nearly as good as expected, leading to the sell-off. Supermicro simply confirmed the date for its next earnings report: April 30.
This news, or lack thereof, not only caused Supermicro stock to tank; it also hurt most AI-related stocks, including NVIDIA, whose chips are utilized in Supermicro servers.
Big-Tech firms report this week
The markets opened on a positive note on Monday because the S&P 500 and Nasdaq moved higher after the opening bell.
This can be a big earnings week for a few of the main technology stocks, so investors could also be cautiously optimistic about their upcoming results. Most notably, social-media giant Meta Platforms (NASDAQ:META) is on account of report on Wednesday while tech behemoth Microsoft (NASDAQ:MSFT) is about to release its quarterly results on Friday.
While analysts are bullish on these two stocks, one other Magnificent Seven stock on tap this week, Tesla (NASDAQ:TSLA), has investors feeling jittery.
The automaker had one other difficult week last week, as its stock price tumbled 14% and continued dropping on Monday, slipping one other 3% in early trading to around $142 per share. Tesla has been facing a string of bad news, because it was reported last week that it was cutting prices on several of its recent models. This comes after the corporate saw a year-over-year drop in cars delivered last quarter.
Tesla also announced a security recall for its recent Cybertruck last week on account of issues related to the accelerator pedal getting stuck.
The corporate is on account of report its quarterly earnings on Tuesday after the market close, and based on Monday’s trading activity, investors are a bit nervous about what they may hear.
This can indeed be an interesting week for the markets.