Wall Street suffers a sharp drop this Thursday, with the Nasdaq down around 5% and the main US indexes accumulating significant pullbacks. The Dow Jones and the S&P 500 are also trading in negative territory, dragged down by selling in the major technology companies, which once again concentrate a large part of the losses.
The Nasdaq drop, especially exposed to technology companies, brings the index closer to the so-called correction territory, which is reached when it falls by at least 10% from its most recent high.
The session comes two days after the US legislative elections, in which the Democrats have made significant gains against Donald Trump’s Republican Party. Investors are assessing the consequences of the new political landscape, although the losses affect the entire technology sector and cannot be attributed only to the electoral result.
Technology companies lead the losses
Sales are concentrated in the highest-capitalization companies, whose weight in the US indexes amplifies the market declines.
Among the affected companies is Tesla, which had already fallen 3.3% in Wednesday’s session and has started this Thursday with a pullback of 9.5%, according to data published by Cinco Días.
The pressure on large technology companies coincides with investors’ doubts about their high valuations and the growth expectations associated with artificial intelligence.
The Nasdaq decline also has consequences for the S&P 500, where the main technology companies concentrate an important share of total market capitalization.
The Nasdaq is approaching a stock-market correction
A fall of 10% from the latest high is considered a stock-market correction. Although it does not necessarily imply the start of a bear market, it reflects a significant deterioration in prices.
Thursday’s pullback increases pressure on a sector that has concentrated much of Wall Street’s gains over the past few years.
The evolution of the US session will also be decisive in checking whether selling spreads to other sectors and international markets.