Summary:
The Nasdaq 100 dropped over 1% on Monday, led by declines in big tech stocks as investors awaited Nvidia's earnings report.
The Nasdaq 100 fell more tha n 1% on Monday, with big technology stocks creating the biggest drag as investors waited for results from Nvidia.
Even a little wobble in confidence about the superiority in US tech giants can go a long way. Having a market cap of over $3 trillion, Nvidia is the largest holding in the index outside of Apple.
As of last Friday, options traders were pricing in a 7.7% move in Nvidia shares following its earnings, compared with an average gain or drop of 9.2% after the last eight quarterly reports.
US stocks have underperformed most its major peers in 2025, as opposed to expectations that Trump's policies help maintain local market's dominance. The rational is in part valuation gap.
Hedge funds exited US tech stocks in the two weeks to February 21 at the fastest pace in six months, according to Goldman Sachs. Meanwhile, they bought Asia stocks at the fastest pace in five months.
Citigroup said positioning has flipped so "dramatically" in favour of Europe. The outlook for lower interest rates, resilient corporate earnings and a potential ceasefire in Ukraine all fuelled the enthusiasm.
The Nasdaq 100 has weakened below 50 SMA and the short-term direction will hinge on Nvidias' earnings report. Thus trade with the trend after it will be appropriate.
Disclaimer: This material is for general information purposes only and is not intended as (and should not be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by EBC or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person.
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