Another Tech Wreck?

The market chose to go down today on Google's disappointing Q3 earnings report rather than Microsoft's upside surprise on Tuesday after the close. Contributing to today's selloff was the rebound in the 10-year bond yield back up to 4.95%. Tech has been weighing on the market since mid-July as the yield rose by 100bps. The Nasdaq is down 10.7% since its 2023 peak on July 19 (chart). It fell to its 200-day moving average today (chart). The S&P 500 is down 8.8% from its July 31 peak and fell below its 200-dma today.

While today was a bad day for the S&P 500 Growth stock price index, it has been outperforming the S&P 500 Value index since January 10 (chart). Last year, growth underperformed Value as the former fell faster than the latter in response to rapidly rising interest rates and widespread fears of a recession. This year Growth has outperformed Value despite the continued rise in interest rates. Excitement about AI boosted Growth at the start of the year, and since then better-than-expected economic growth has been doing so.