Big Tech Drags Down the Markets as Earnings Get Underway – US Market Wrap

Wall Street received a reality check after a disappointing start to the megacap earnings season raised concerns that the artificial intelligence frenzy that has propelled the bull market may be overblown.

The world’s largest technology companies drove the S&P 500 down 2.3%, marking the worst selloff since December 2022. The Nasdaq 100 suffered more significant losses, falling nearly 4%. Alphabet fell 5% after allocating more resources to its AI push, with spending exceeding analysts’ expectations. Tesla’s profit miss and Robotaxi delay prompted a 12% stock drop.

Wednesday’s session was another example of the “concentration risk” that bears see in a market where the upside has been disproportionately attributed to a small group of massive gainers. For the fourth consecutive session, and the tenth time in 11 days, smaller companies outperformed larger ones, indicating that investor preferences have shifted away from the megacap tech names that have come to dominate benchmark indexes.