Speculative stocks, especially those tied to the technology sector, are leading the stock market down on Aug. 5. Trump Media & Technology (NASDAQ:DJT) is down over 8% as of this writing. Meanwhile, both Bitcoin (BTC-USD) holder MicroStrategy (NASDAQ:MSTR) and Robinhood (NASDAQ:HOOD), which caters to young traders, are down nearly 9%.
In the tech sector, Intel (NASDAQ:INTC) is the big loser, down 6% at around $20 per share. Nvidia (NASDAQ:NVDA) is also down 5% but has crept to over $100 per share.
The broader market is down a lot less, buoyed by positive numbers from the Institute for Supply Management (ISM) Services Purchasing Managers Index (PMI). That showed that the services sector of the economy is still growing. The reading was 51.4%, with 50 being a stable level. Previously, the index had been signaling a contraction.
Still, all the major averages are down on the day currently. The Nasdaq Composite is down 2.6%, the S&P 500 is down 2.2% and the Dow Jones Industrial Average is down 2% as of this writing.
A Flight to Safety
Other cloud giants are starting to recover lost ground today. Amazon (NASDAQ:AMZN) and Apple (NASDAQ:AAPL) are down about 4%. Next, Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL) is down roughly 2% and Microsoft (NASDAQ:MSFT) is falling over 2.5%. Still, doubts about artificial intelligence (AI) profits continue to hurt Big Tech, with even proven leadership like Adobe (NASDAQ:ADBE) down 3% and ServiceNow (NASDAQ:NOW) falling more than 1%.
Safety is to be found in bonds, where yields fell and prices rose. The 30-year bond was trading at 4.07% around noon, its price $1.09 on the dollar. The 10-year yield fell to 3.87%, with bonds worth around $1.04 on the dollar. The yield curve remains inverted — often a recession signal — with the three-month note yielding 5.21%.
What Happens Next?
Much depends now on international news and the Federal Reserve. A cut in short-term rates is priced in for September, but the Fed could act earlier if it feels the need to do so.
On the date of publication, Dana Blankenhorn held a LONG position in AAPL, INTC, MSFT, AMZN and NOW. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
On the date of publication, the responsible editor did not have (either directly or indirectly) any positions in the securities mentioned in this article.
