Two reasons –
First Wednesday evening Broadcom (symbol AVGO) which has had great performance for 18 months issued their quarterly report regarding earnings, revenue, etc. Excellent numbers but they did not outperform the “whisper numbers” and since these stocks are priced for perfection it dropped 13% Thursday and another 8% today. However the stock is still up 48% for one year. Anyway this spooked the other semiconductor stocks – for example Nvidia down 6%, AMD down almost 11%. Of course AMD is up over double year to date (108%) so when people get any little glitch it’s an excuse to take profits.
Second, the job creation numbers, expected at 85,000 came in at double that – 172,000. So good news BUT makes it very unlikely that there will be any interest rate lowering by the Fed this year. It even raises the possibility of a rate hike later this year to put a clamp on inflation. Stocks love interest rate drops and hate rate hikes.
Overall the S & P 500 was down 2.5% and the NASDAQ 4.2%.
So a correction or sorts, and after the run-up of the last few months no need for panic. Here’s the answer –
Leave a Reply