U.S. stock market: Nasdaq down 1.4% for two days straight as tech stocks fall

Most of the Magnificent 7 stocks fell by nearly 1~3%

Options traders aggressively bought put options on Invesco QQQ Trust Series 1 ETF

On the 20th (local time), awaiting the latest minutes from the Federal Reserve Board, New York stock markets saw tech stocks continue their sell-off for a second consecutive day, with only the Dow showing gains, while the Nasdaq dropped more than 1% again.

As of 10:20 a.m. EST, only the Dow Jones Industrial Average was up by 0.18%. The S&P 500 declined by 0.7%, and after plunging close to 1.5% the previous day, the Nasdaq again dropped by 1.4%.

The 10-year U.S. Treasury yield was steady at 4.30%. The dollar fluctuated.

NVIDIA, which had led the tech slump with a loss of over 3.5% the previous day, was down another 2.6% at this time. Palantir, which faced an analyst report stating its stock is still overvalued even after an 80% drop from current levels, traded around $145, nearly 8% lower for the day.

Apple, Microsoft, Alphabet, Amazon, Meta, Tesla—most of the Magnificent 7 stocks—fell more than 1%.

Major retailer Target's stock lost almost 10% after reporting lower quarterly results and announcing a new CEO. Lowe's, a home improvement retailer, reported better-than-expected sales and profits, pushing its stock up almost 3%.

Bitcoin slipped 0.1% to $113,410.83. Ether rose 0.6% to $4,182.53.

The recent tech decline was attributed mainly to excessive valuations. According to data compiled by Bloomberg, the Nasdaq 100 index is trading at 27 times its expected earnings for the next 12 months, far above historical averages.

Bank of America strategists led by Michael Hartnett repeatedly warned this year of bubble risks in the sharp rallies among the Magnificent 7 stocks.

According to Jeff Jacobson of 22V Research, after the recent run-up in tech stocks, options traders loaded up on put options for Invesco QQQ Trust Series 1 ETF, fearful of further declines.

Matt Maley of Miller Tabak, however, assessed optimistically that "the recent decline in the tech sector is likely to prove as mild as the one three weeks ago."

Meanwhile, the market is anticipating the release of the Fed’s July meeting minutes at 2 p.m. EST. At that time, policymakers had decided to keep rates steady, but Christopher Waller and Michelle Bowman dissented—a first among Fed board members since 1993.

According to CME Group’s FedWatch Tool, rate traders have priced in an 85% chance of a rate cut in September.

Andrzej Skiba, head of U.S. fixed income at RBC Global Asset Management, predicted, "This year’s Jackson Hole meeting is expected to provide another opportunity for Chair Powell to signal monetary easing."

Guest reporter Jung-A Kim kja@hankyung.com