Tech stocks like NVIDIA and Tesla dropped, but Real Estate and Utilities ETFs gained

From Nasdaq: 2024-07-12 15:00:00

Big Tech took a beating on Thursday, dragging down the “Magnificent 7” stocks like NVIDIA by over 5% and causing the Nasdaq Composite to drop almost 2%. Tesla shares plummeted over 8% after news of a potential robotaxi delay, leading to a 4.5% decline in the Roundhill Magnificent Seven ETF.

Inflation continues its downward trend with the Consumer Price Index slipping 0.1% in June and rising only 3.0% year over year. This marked the slowest increase in consumer prices since early 2021, fueling speculation of an earlier rate cut by the Federal Reserve. Around 90% of traders now expect a rate cut by September.

As investors anticipate rate cuts, rate-sensitive sectors like Real Estate and Utilities saw gains. Vanguard Real Estate Index Fund ETF Shares and Utilities Select Sector SPDR Fund rose 2.8% and 1.7%, respectively. The shift towards these sectors reflects expectations of a falling-rate environment and attractive yields in a low-rate setting.

The potential for a rate cut by the Fed could benefit sectors like Financials and Industrials, which may see improved performance. The Dow Jones, with significant exposure to financial stocks, is expected to fare well. In a low-rate environment, these sectors may see enhanced profitability, attracting investor interest.

Despite Thursday’s slump, the “Magnificent 7” stocks are poised for recovery due to the favorable low-rate environment. While debates continue over stock valuations, the artificial intelligence initiatives of these tech giants may drive future growth. Investors eyeing potential upside may consider buying the dip in these high-growth tech stocks.



Read more at Nasdaq: ETFs That Gained on Mag 7’s Worst Day in a Year