Tech Stocks Slide as Wall Street Sell-Off Continues
Nasdaq drops nearly 1.5% as investors cash in on AI-driven gains and await signals from the Federal Reserve's Jackson Hole meeting.
Wall Street’s technology-led rally faltered for a second consecutive day on Wednesday, as investors took profits from the sector’s recent surge and adopted a cautious stance ahead of Federal Reserve Chair Jerome Powell's upcoming speech.
The tech-heavy Nasdaq Composite led the declines, falling nearly 1.5%, while the broader S&P 500 shed 0.8%. The sell-off reflects growing anxiety over stretched valuations in a sector that has been the primary driver of market gains this year, largely fueled by enthusiasm for artificial intelligence.
Analysts attributed the downturn to a combination of profit-taking and pre-positioning for the central banking symposium in Jackson Hole, Wyoming. "As valuations get pushed to a historical high, traders and hedge funds tend to pull back," said Anna Wu, a cross-asset strategist at VanEck in Sydney. "Today’s fall is pre-Jackson Hole caution and profit-taking."
Investors appeared to rotate out of high-growth tech stocks and into more defensive sectors, with real estate and utilities among the few gainers. The move signals a broader risk-off sentiment as the market awaits Powell’s remarks on Friday for clues about the future path of interest rates.
"I think we were priced for perfection in the U.S. and there was quite a lot of complacency in markets, so some summer volatility should have been expected,” noted Ben Laidler, head of equity strategy at Bradesco BBI. While the long-term outlook for technology remains a topic of debate, the immediate focus for traders is firmly on the Federal Reserve and whether its next moves will support or stymie the market's recent momentum.