Technology stocks popular with retail investors tumbled Monday as investors took profits on their 2024 winners and dumped the more speculative names in an environment of rising interest rates.
Nvidia slumped 2%. Palantir dropped 4%, while quantum computing winner Rigetti Computing plunged about 33%. Last year's Nasdaq winner AppLovin also sold off about 1.5%.
The sell-off comes amid a rise in bond yields, with the 10-year Treasury yield touching its highest level since late 2023 on Monday. A strong jobs report Friday cast doubt over whether the Federal Reserve will continue cutting interest rates at all this year.
"While tech stocks made major gains as interest rates dropped last year, both Wall Street and Main Street have grave doubts about any further rate cuts by the Fed," said AXS Investments CEO Greg Bassuk, adding that Friday's report "cemented" those concerns.
Monday's moves also follow a losing week for many key tech and quantum computing names, with Truist's Keith Lerner noting that leaders eventually fall in a corrective phase. The general market uptrend is "still intact" but undergoing a reset, the co-chief investment officer said.
"That's a necessary part of a corrective phase in our view and we are likely further along in this correction than many investors recognize since many stocks peaked in late November, early December," Lerner said.
Other famed technology stocks also dropped Monday, with Micron Technology declining 4%. The declines across the semiconductor sector came amid news of more U.S. government curbs on AI chip exports.
Quantum computing stocks that got a boost from last year's positive Alphabet chip announcement also plunged, with D-Wave plunging 33%. IonQ lost 15%. The selloff came on the heels of commentary from Meta CEO Mark Zuckerberg that echoed Nvidia CEO Jensen Huang's commentary last week suggesting that useful quantum computers are decades away.
Megacap tech names Apple and Meta Platforms and dropped more than 1% each, while Amazon, Alphabet and Microsoft edged down less than 1%.
