The Nasdaq-100, a tech-heavy index, has been on a remarkable streak, going 303 trading sessions without experiencing a pullback of 2.5% or more, according to Jonathan Krinsky, the chief market technician at BTIG. This streak stands as the third-longest since 1990. Despite this impressive run, Krinsky suggests that the market may be due for some volatility, although this doesn’t necessarily signal an imminent downturn in the AI-driven boom of U.S. stocks.
The Invesco QQQ Trust Series ETF, which closely tracks the Nasdaq-100 and ranks among the most popular ETFs traded in the U.S., has been hitting record highs consistently in 2024, notching up 14 consecutive record highs. The ETF’s latest record high was achieved on Friday, with a 1.5% increase that brought it to a close at $445.61.
According to data from FactSet, the last significant pullback of 2.5% or more occurred on Dec. 15, 2022, when the QQQ ETF experienced a 3.4% decline. Interestingly, the Nasdaq-100 has been achieving these records even in the absence of support from Apple Inc., a company once considered a cornerstone of the index. Despite Apple’s 9.1% decline in the year thus far, the Nasdaq-100 has managed to climb by 8.3%, according to FactSet.
This divergence in performance among the major technology stocks, sometimes referred to as the “Magnificent Seven,” has been increasingly notable since the start of 2024. In contrast, these same stocks were instrumental in driving gains for the S&P 500 throughout 2023.
Monday’s trading session provided a clear illustration of the divergence in performance among major tech stocks. Nvidia Corp. surged by 3.6%, presenting a stark contrast to Tesla Inc.’s 7.2% decline. Similarly, Alphabet Inc. experienced a 2.8% drop, while Apple saw a 2.5% decrease.
Jonathan Krinsky pointed out that while there may be some encouraging signs of broadening beyond the dominant “AI” trade, it’s essential not to overlook the dispersion beneath the surface. The persistent one-way movement in many momentum names could potentially lead to consequences, albeit possibly only in the short term.
The weakness in several megacap names, particularly in the tech sector, had a notable impact on the broader Nasdaq indices. Both the Nasdaq-100, which encompasses the 100 largest nonfinancial stocks traded on the Nasdaq, and the Nasdaq Composite, which includes over 3,000 stocks listed on the exchange, closed 0.4% lower. Additionally, the S&P 500 saw a slight decline after briefly turning positive, while the Dow Jones Industrial Average also ended the day lower.