![The Big Tech Recession Is Sounding a Big Alarm Bell for the Market](https://news7g.com/wp-content/uploads/2024/09/108024913-1724424885400-gettyimages-2167216426-AFP_36EP6MK-780x470.jpeg)
When tech goes up, the broader stock market goes down. Right now, that’s not a good thing. The S&P 500 and Nasdaq Composite fell 2.1% and 3.3%, respectively, on Tuesday. That marked each benchmark’s worst day since the Aug. 5 sell-off. The losses were led by declines in tech. Nvidia fell more than 9%, its biggest one-day drop since mid-April. ON Semiconductor fell 8.8% and Advanced Micro Devices lost 7.8%. Apple fell 2.7%, while Alphabet fell 3.7%. Tech has been a mainstay of the market all year, with enthusiasm around artificial intelligence pushing stocks to record levels. In the short term, however, the sector could come under pressure. “While some of the froth appears to have run out, mid-term flows into tech have not yet hit lows, and positioning remains high across retail, ETFs and [hedge funds] “We may not see the same kind of rapid 20% peak-trough declines that we saw in AI TMT stocks from mid-July to early August, but Tech’s prolonged underperformance may persist.” Wall Street’s latest pullback also comes amid renewed fears about the state of the U.S. economy. Two sets of data released Tuesday showed a decline in U.S. manufacturing. To be sure, BTIG’s Jonathan Krinsky notes that the relative outperformance in certain sectors does not indicate a recession. “The confusing part is that it has been replaced by some low-volatility (defensive) sectors, but also sectors like financials and industrials. Financials [made] 18-month relative high [Tuesday]“If the market is concerned about an impending recession, we won’t see that type of setup,” the firm’s chief market technician wrote. Krinsky also said the S&P 500 still has a chance of hitting an all-time high in the near term, but noted that the path past its previous peak “will be very choppy.” Elsewhere on Wall Street this morning, Morgan Stanley upgraded container and packaging maker Ball Corp. to outperform from equal weight. “We see a compelling buying opportunity,” the bank said. “We believe investors are overly focused on the near-term underperformance in North America volume relative to peers and are underestimating the company’s ability to grow earnings over the medium term.”