Key points
- Since February 19, Nvidia is down 17pc
- The Roundhill Magnificent Seven ETF (MAGS) has fallen 16pc
- Market grappling both external pressures, internal recalibrations
ISLAMABAD: The S&P 500’s rapid 10 per cent decline from a record high into correction territory has wiped out trillions of dollars in market value.
The market value of the S&P 500 at its February 19 peak was $52.06 trillion, according to FactSet. Thursday’s decline put the index’s market value down to $46.78 trillion, according to CNBC.
That makes for a total loss of about $5.28 trillion in about three weeks.
The decline has come in the shadow of President Donald Trump’s burgeoning trade war with several of the United States’ major trading partners, with headlines about tariffs at times seeming to drive market moves. There have also been signs of slowing economic growth, with weak consumer sentiment surveys and tepid outlooks from retailers like Walmart, according to CNBC.
“Uncertainty tax”
“Our interactions with clients indicate that the mood music is changing. While many see recession talk as premature, concerns about erratic policy from the new administration abound, with the “uncertainty tax” hitting growth expectations,” Barclays strategist Emmanuel Cau said in a note to clients, according to CNBC.
Another contributing factor to the decline appears to be the unwind of the growth trade related to artificial intelligence. Since February 19, Nvidia is down 17 per cent and the Roundhill Magnificent Seven ETF (MAGS) has fallen 16 per cent.
Pressures and recalibrations
The run up in those AI-related stocks before the correction had raised concern that the stock market was too richly valued, with several names at times having their own market caps above $3 trillion. Even now, the S&P 500 is trading at 24.1-times its trailing 12-month earnings, according to FactSet, which is well above its long-term average, according to CNBC.
According to Wall Street Pit, the broader context reveals a market grappling with both external pressures and internal recalibrations. The trade war’s ripple effects are amplifying uncertainty, as businesses and investors weigh the potential for prolonged disruption against a backdrop of softening economic indicators.
