With Wall Street projecting that the tech behemoths’ profit growth is poised to slow, traders are plowing this year’s winnings into cheaper areas — like small-capitalization stocks caps that stand to benefit from lower borrowing costs, and sectors like health care, where earnings are expected to perk up. It’s all heightening the focus on next week, when major tech companies start reporting quarterly results.
The stakes were already elevated for technology giants heading into this earnings season. They just got a lot higher after the worst week for the Nasdaq 100 Index in three months.
After driving the rally in US stocks for most of the year, Big Tech slammed into a wall this week. Investors rotated from high-flying megacap shares to riskier, lagging parts of the market, spurred by bets on Federal Reserve interest-rate cuts, the threat of more trade restrictions on chipmakers and concern that the hype around artificial intelligence may be overblown. AI darling Nvidia Corp. sank 8.8% this week, while Amazon.com Inc. dropped 5.8%.
