A wave of “tech-heavy” selling has wiped nearly $1 trillion in market capitalization from the S&P 500 over the past week, sparking alarm among veteran traders and retail investors alike.
NEW YORK — The sell-off intensified on Tuesday and Wednesday, with the tech-heavy Nasdaq Composite plunging 1.7% and 1.4% in back-to-back sessions. Even the broader S&P 500 fell 0.5% today, pulling further away from its record highs as the “Magnificent Seven” stocks—including Nvidia and Microsoft—faced significant repricing.
“What the heck is going on?”
The market’s erratic behavior caught the eye of Peter Tuchman, the iconic New York Stock Exchange floor trader known as “The Einstein of Wall Street.” In a viral post, Tuchman highlighted the staggering $1 trillion loss, asking, “What the heck is going on?!?”
Analysts point to three primary drivers behind this “wild and crazy” market action:
1. The “deleveraging” domino effect
The market is currently reeling from a massive “unwind” in commodities. Last Friday, gold and silver suffered a historic wipeout, erasing a combined $7.4 trillion in value.
- The impact: Traders who were heavily leveraged in precious metals were hit with massive margin calls. To cover those losses, they have been forced to sell off their “winners”—primarily high-growth tech stocks—creating a “bleeding” effect across all asset classes.
2. The “Kevin Warsh” factor
Uncertainty at the Federal Reserve is peaking. President Donald Trump’s nomination of Kevin Warsh to succeed Jerome Powell has introduced a “hawkish surprise” to the markets.
- The impact: Warsh is historically viewed as more disciplined on monetary policy than Powell. Investors are now reassessing the “Fed Put”—the idea that the central bank will always step in to save the market—causing a rotation out of expensive tech valuations and into safer “Value” sectors like Energy and Industrials.
3. The AI “sorting process”
After a year of “AI-only” gains, the market is becoming more discerning.
- The culprits: Microsoft (MSFT) saw its worst day since 2020 recently, shedding $350 billion in value due to concerns over high AI infrastructure spending. AMD also capsized nearly 10% this morning after issuing disappointing guidance.
- The shift: Investors are moving money into companies showing actual profit from AI, like Palantir (PLTR), which jumped 7% on strong revenue outlooks.
Divergence: Dow vs. Nasdaq
While tech is being “shelled,” the Dow Jones Industrial Average briefly hit a new all-time high of 49,633 this week before pulling back. This massive divergence suggests a major portfolio rebalancing is underway. Investors are fleeing the “Nasdaq bubble” and seeking refuge in traditional blue-chip stocks like Walmart (WMT), which recently joined the exclusive $1 trillion market cap club.
The bottom line
The $1 trillion wiped off the S&P 500 is a stark reminder that even the strongest bull markets can be derailed by sudden deleveraging and geopolitical shifts. With more big-tech earnings from Alphabet and Amazon due this week, the volatility is likely far from over.
