A 4% drop puts the Nasdaq back to where it was in November 2021. Amazon, Tesla and Alphabet are already back to levels from 3-4 years ago. Nvidia is -24% from its peak.
From WOLF STREET by Wolf Richter.
The rate cut is coming, and will take effect on September 18. The stock market dream is coming. The rate cut mania was driving the market higher until July, but now that those dreams are coming true, things are worsening for the major parts of the stock market.
S&P 500 IndexAfter digesting Friday's jobs report, stocks fell 1.7% in one day and 4.2% for the four-day week, their biggest weekly drop since March 2023, to 5,408. But they're still relatively stable, down just 4.6% from their mid-July peak. That's compared to the fundamentals we'll look at below (all stock data is Y Chart):
Nasdaq Composite Index The daily number of cases was down 2.6% to 16,691. The weekly number of cases is down 5.8% and is down 10.5% from the peak on July 10.
A further 4.2% drop would put it back to where it was almost three years ago in November 2021. Between that and then, there was a 36% plunge and a generational (i.e., once-in-a-generation) rally of 81% in 19 months.
Considering the August 7th drop is just 500 points away, this curve has make-or-break qualities.
semiconductor It went bankrupt. VanEck Semiconductor ETF [SMH] It plummeted 4.1% on Friday, 11.7% for the four-day week, and is down 23.6% from its peak on July 10. Once again, the make-or-break nature of this curve is apparent.
Russell 2000The Russell 3000 index, which covers the 2,000 smallest stocks, fell 1.9% for the day and 5.7% for the week, down 14.4% from its November 2021 peak and back to levels it first reached in January 2021.
These are 2,000 stocks, not very small stocks, but they're not the top 1,000. There's chaos in that part of the stock market.
Mag-7Stock The combined market capitalization of Amazon, Alphabet, Microsoft, Apple, Nvidia, Tesla and Meta fell 2.9% in a day, 6.1% in a week and is now down 14.9% from its July 10 peak.
These seven stocks alone have lost $2.54 trillion in market cap in the two months since their peak. We focus on the Mag 7 because of their sheer size: their combined market cap still stands at $14.5 trillion (down from $17 trillion on July 10), and their sheer size has had a major impact on the overall stock market wealth, as well as a large uptick.
Each grid line in the graph below represents $1 trillion. From the beginning of 2019 to its peak on July 10th, Mag7 market cap soared 386%, or $14.5 trillion. 2020 and 2021 were great times for stocks when the Fed printed about $5 trillion and pumped it into the market. But since then, the Fed did QT and lost $1.85 trillion. And it's been tough for stocks in 2022. Then AI mania came to the rescue in 2023 until July 10th, 2024. But now that's subsiding.
And with the August 7th bottom just around the corner, another deciding factor has emerged: cutting rates would be a big deal, and they haven't even started yet.
For six of the Mag 7s, the peak was July 10th. For Tesla, it was November 2021.
| Mag7 | $ Stock Price | This week's decline | Percentage decrease from peak |
| Amazon [AMZN] | 171.43 | -4.0% | -14.2% |
| alphabet [GOOG] | 152.16 | -7.8% | -21.0% |
| Microsoft [MSFT] | 401.68 | -3.7% | -13.8% |
| apple [AAPL] | 220.89 | -3.5% | -5.2% |
| NVIDIA [NVDA] | 102.70 | -14.0% | -23.9% |
| Tesla [TSLA] | 210.89 | -1.5% | -48.6% |
| Meta | 500.50 | -4.1% | -6.4% |
Three of the Mag 7 companies — Alphabet, Nvidia and Tesla — are down more than 20% from their peaks. Tesla is down 48.6% from its November 2021 peak and 19.9% since July 10. So let's take a closer look at these three standouts, as well as Amazon, which is back to where it was four years ago.
NVIDIA Its market capitalization has now fallen to a still-massive $2.52 trillion, down $406 billion this week and $800 billion from its July 10 peak.
The stock and the company's revenues and profits have been propelled by the fanciful AI craze that has swept the world, but that momentum appears to be fading.
Amazon It's down 14.2% from its July 10 peak, back to levels last seen exactly four years ago in September 2020. Notice the sharp drop and the 100%+ surge in between. Everyone had a blast.
alphabetIt has fallen 21% from its July peak and is now just above its November 2021 opening price.
Tesla It's down 48.6% from its November 2021 peak, back to levels first recorded nearly four years ago in December 2020. Of course, buy-and-hold investors who bought in 2019 or earlier — the eve of Tesla becoming a profitable global automaker — are still up big time, but they've lost roughly half of their former gains over the past three years.
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