The Nasdaq Composite experienced its steepest decline since October 2022 on Wednesday, driven by disappointing earnings reports from Tesla (TSLA) and Alphabet (GOOGL) that undermined investor confidence in once-high-flying stocks.
The index plummeted 654 points, or 3.6%, marking its largest single-day drop since a near 3.9% fall on October 7, 2022. This decline was the Nasdaq’s most significant in terms of points since March 16, 2020, when the Federal Reserve cut interest rates to near-zero in response to the initial impact of the Covid-19 pandemic.
The sell-off on Wednesday wiped approximately $985 billion from the market capitalization of the $27 trillion Nasdaq.
Impact on the “Magnificent Seven”
The drop was particularly severe for the Magnificent Seven—seven tech giants that have driven numerous record highs this year. The Roundhill Magnificent Seven ETF (MAGS), an equal-weighted index tracking these companies, fell 6.1%, its largest decline since its inception in April 2023.
The ETF’s performance pushed it into correction territory, with shares down 12% since July 10, when a softer inflation report led to a shift in investor focus towards small-cap stocks poised to benefit from anticipated interest rate cuts.
