Market View: Tech stocks sold off heavily, but the overall trend remains intact.
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This week, the US stock market faced selling pressure, particularly in the Technology sector (XLK), which dropped by over -2.28% in the past five days. This was the steepest decline compared to other sectors, while Healthcare, Consumer Staples, and Financials were able to maintain positive gains. This reflects that the current market correction is primarily concentrated in the Tech sector.
Why is the Tech sector being sold off?
Short-term positive factors have almost all been priced in.
• The market has already priced in an 80% chance that the Fed will cut interest rates in September.
• The financial results of major Tech companies have almost all been announced, with only NVIDIA remaining next week.
Therefore, a number of investors took this opportunity to sell and realize profits. However, from a technical perspective, a 4-5% pullback in the NASDAQ is considered normal during a bull run.
Last night, the NASDAQ fell sharply by -2% but saw buying pressure return late in the session, closing with a Doji candlestick, which indicates persistent buying interest. Most importantly, the index remains within a strong bullish trend channel.
Conclusion:
Short-term: The market may remain volatile, awaiting clarity from the Jackson Hole meeting.
Long-term: The Tech sector still has strong fundamentals driven by major megatrends, including AI, Semiconductors, and Cloud computing.
Therefore, this correction might not be a negative signal but an “opportunity” to wait for the right moment to accumulate new positions in Tech funds or stocks, especially after the key meeting at the end of this month.
