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A shopper stands in front of a Tesla Motors showroom at a retail shopping mall in Hong Kong.
Sebastian Ng | Sopa Images | Lightrocket | Getty Images
This report is from today’s CNBC Daily Open, our new, international markets newsletter. CNBC Daily Open brings investors up to speed on everything they need to know, no matter where they are. Like what you see? You can subscribe here.
What you need to know today
The bottom line
The attempted insurrection in Russia across the weekend dominated headlines, but it didn’t seem to occupy investors’ minds. Instead, “macro factors are likely to remain the main drivers of risk assets,” wrote Barclays’ Global Chairman of Research Ajay Rajadhyaksha in a Monday note.
Indeed, tech stocks slumped across the board as investor enthusiasm over artificial intelligence fizzled out and was replaced by a more clear-eyed view of today’s economic conditions.
Alphabet fell 3.27% after UBS downgraded the company, citing stiff competition in the AI sector. Nvidia and Meta fell in sympathy, losing more than 3% each. But that wasn’t as bad as Tesla’s plunge of 6.06% after Goldman Sachs downgraded the electric car maker because of a “difficult pricing environment for new vehicles.”
The sell-off in tech put pressure on the Nasdaq Composite, which sank 1.16%. The S&P 500 fell 0.45% while the Dow Jones Industrial Average dipped 0.04%.
There might be more pain to come. The tech rally is “running out of steam,” according to Berenberg, a German bank. Tech, as a future-oriented sector, needs lower interest rates if it wants to continue rising.
But with the Federal Reserve emphasizing it’d keep rates high for now, lower rates would imply “a sharp economic slowdown,” Jonathan Stubbs, equity strategist at Berenberg, wrote. Stubbs mentioned that such a scenario would “be to tech’s disadvantage,” but, really, no one would benefit from it.
Nonetheless, with just a few days left before June ends, the three major indexes are poised to finish the second quarter higher. The recession is still months away, it seems — as it’s been for the past year. Fingers crossed we manage to elude it for so long that it gets tired of catching up with us.
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