Both the S&P 500 (SPX) and the Nasdaq 100 (NDX) are trading lower on Thursday as a blowout earnings report from Nvidia (NVDA) failed to subdue concerns about a bubble in AI.
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Trade QQQ with leverageNVDA is the largest holding in both SPX and NDX, with weights of 7.32% and 13.57%, respectively. Despite the semiconductor leader beating on revenue, adjusted EPS, and guidance, investors chose to focus on customer concentration risk and the uncertainty of revenue from China amid restrictive regulatory measures.
Software, Financial Stocks Shine as Mega Caps Slide
Other members of the Magnificent 7, including Alphabet (GOOGL), Amazon (AMZN), and Tesla (TSLA), are also showing weakness alongside semiconductor stocks like Broadcom (AVGO) and Micron (MU).
However, software stocks are a bright spot on the day, with ServiceNow (NOW), CrowdStrike (CRWD), and Datadog (DDOG) all up by at least 4%. The financial sector is also catching a bid as the “rotational bull market” continues, said Piper Sandler Chief Market Technician Craig Johnson.