Concerns over tech earnings and a slowing US economy hit the Nasdaq Composite index on Friday, putting it on course for a 10% decline from its early July record high, a level commonly termed a “correction” by market participants.
The tech-heavy index was down around 3% this afternoon, following a softer-than-expected jobs report that raised concerns about whether the Federal Reserve will need to implement substantial rate cuts at its next meeting to prevent the economy from sliding into recession. Disappointing earnings from Amazon and Intel also unsettled investors.
The Nasdaq has fallen 10.4% from its record close of 18,647.45 points on July 10. An index or stock is generally considered to be in a correction when it closes 10% or more below its previous record high.
Tom Plumb, chief executive and portfolio manager at Plumb Funds, commented:
“This is an old-fashioned correction going on. We passed the economic torch from the perception of growth to the perception of needing government intervention with lower interest rates to stabilize the economy.”
Over the past 44 years, the index has entered correction territory after hitting a new high 24 times, or about once every two years, according to a Reuters analysis of LSEG data.
Despite the recent decline, the Nasdaq is still up 12% this year.
