The rally is over! NASDAQ leads US stock market declines


The halcyon days of US tech stock rallies with increasing values of companies listed on the NASDAQ exchange, which have taken place alongside the increasing values of other North American indices, have ended abruptly.

The past few weeks have been of great interest, with the NASDAQ index leading the charge toward a seemingly unrelenting increase in value as confidence in large companies developing AI technology, such as NVIDIA, well known for its graphics cards and now highly engrossed in AI development, as well as strong performance from specialist American firms such as Broadcom and cloud computing giant Cloudstrike Holdings which have led the rally well into March.

As well as the NASDAQ index having tailed off, other US stock indices have experienced similar decrements.

The tables turned quite significantly at the end of last week; however, when the NASDAQ index began to reduce in value, the all-time highs of last week were not replicated this week.

Indicative pricing only

On Friday, the NASDAQ index was trading at 18,273.8 according to FXOpen pricing; however, as market participants anticipate the opening of the US market today, the tech-friendly index is valued at 17,975.7 at the bottom of the candlestick in the pre-market opening hours.

In keeping with the nature of US tech stocks, volatility is once again a subject of discussion across mainstream reports and among analysts, especially given that one of the contingents of the NASDAQ index that was contributing to its rally, NVIDIA, has experienced a decline in stock value by 5.5%, according to some media reports, during the course of Friday last week after a substantial rally that has seen it gain approximately 80% year to date.

The NASDAQ index's tailing off may be moderate, and its overall value is still high compared to periods before the recent rally, but it is enough of a reduction to pique the interest of commentators and analysts this morning.

The market currently is at an interesting crossroads, largely because of the hyperbole surrounding AI development, which has propelled companies such as NVIDIA into stratospheric valuations, which have, in turn, assisted the NASDAQ to perform very highly - compare the recent NASDAQ rally to the stagnation of indices containing traditional stocks relating to traditional companies as per London's FTSE 100 - it is easy for such confidence to fall due to the speculatory nature of what commercial revenues can come from the eventual development of AI.

Ergo, this current bout of market confidence is driven by the 'what if' factor if AI products can drive revenue for tech companies whose bread and butter has been other areas - in NVIDIA's case, hardware, whereas there are other firms whose fortunes are driven by actual results. Tesla is one of those and has recently been a contributor to volatility among NASDAQ contingents. However, news has emerged that Tesla's giant factory in Germany is set to resume production today after a power outage that was set to be rectified by March 15. Therefore, it will be interesting to note how this affects the performance of the NASDAQ index, given that it is one of the highest-capitalised public corporations in the index.

Overall, volatility has been the key facet for a few months now, and tech stocks are back in focus, a huge contrast to the doldrums of two years ago.

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This article represents the opinion of the Companies operating under the FXOpen brand only. It is not to be construed as an offer, solicitation, or recommendation with respect to products and services provided by the Companies operating under the FXOpen brand, nor is it to be considered financial advice.

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