Retail and Institutional Investor Insights – July 2024 Edition
Nasdaq Composite Selloff: Key Insights and Investment Considerations
The recent selloff in the Nasdaq Composite (COMP:IND) has captured the attention of both retail and institutional investors. The tech-focused index has experienced a significant downturn, dropping 7.1% over the past two weeks since July 11. This report provides a detailed analysis of the situation, including the factors driving the decline and potential investment opportunities during this period of market volatility.
Nasdaq Composite Performance
| Two-week Decline: | 7.1% |
| Wednesday's Drop: | 3.6% |
| Current Status: | Trading below the 50-day moving average for the first time since early May. |
| Proximity to Moving Averages: | 3.1% away from the 100-day average 9.5% away from the 200-day average |
| Historical Context: | Worst single-day performance since October 7, 2022, and worst 10-day decline since December 2002. |
Drivers of the Decline
The latest downward move in the Nasdaq was primarily driven by disappointing earnings reports from major tech companies, including Tesla (TSLA) and Alphabet (GOOG) (GOOGL). These “Mag 7” names have significant influence over the index, and their weaker-than-expected earnings have exacerbated market concerns.
Sector Impact
The Nasdaq’s decline has had a ripple effect across multiple sectors, notably:
- Growth Stocks: General growth stocks have seen a significant pullback.
- Information Technology: The info tech sector, including semiconductors and software industries, has been heavily impacted.
Investment Opportunities
Despite the market’s recent volatility, there are opportunities for savvy investors. Below are some exchange-traded funds (ETFs) that track the affected sectors and could be worth monitoring for potential entry points:
Popular ETFs to Watch
1. Growth Sector ETFs:
- Vanguard Growth ETF (VUG): Tracks the performance of the CRSP US Large Cap Growth Index.
- iShares Russell 1000 Growth ETF (IWF): Provides exposure to large and mid-cap U.S. growth stocks.
2. Information Technology Sector ETFs:
- Technology Select Sector SPDR Fund (XLK): Focuses on technology companies within the S&P 500.
- iShares U.S. Technology ETF (IYW): Offers broad exposure to U.S. technology companies.
3. Semiconductor Industry ETFs:
- iShares Semiconductor ETF (SOXX): Tracks the performance of the ICE Semiconductor Index.
- VanEck Vectors Semiconductor ETF (SMH): Provides exposure to the 25 largest U.S. listed semiconductor companies.
4. Software Industry ETFs:
- iShares Expanded Tech-Software Sector ETF (IGV): Targets software companies and technology services.
- Global X Cloud Computing ETF (CLOU): Focuses on companies involved in cloud computing.
Conclusion
The recent selloff in the Nasdaq Composite presents both challenges and opportunities for investors. By understanding the drivers behind the decline and identifying key sectors and ETFs to monitor, investors can make informed decisions to navigate the current market conditions.
For further insights and personalized investment strategies, contact your ArcStone Securities and Investments Corp. advisor.
ArcStone Financial Pulse Team
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