IXIC: Nasdaq Composite Dives 1.5% as Nvidia Drags Tech, AI Stocks in Retreat

Tuesday was a bad day to be a tech stock but to be an AI stock was even worse. After all, it’s too top heavy with Nvidia towering over everything.

💻 Tech Rout Takes Center Stage

• The Nasdaq Composite IXIC plunged 1.5%, its worst single-day drop in three weeks, while the S&P 500 slipped 0.6% as heavy tech selling rippled across markets. The Dow Jones Industrial Average hit a record during the session on stellar Home Depot earnings.
• Tuesday’s session served up a brutal reminder: when Nvidia sneezes, tech catches a cold. The tech-dense Nasdaq led losses across Wall Street, as chipmakers, software darlings, and AI-heavy names faced a synchronized selloff.
• Nvidia NVDA fell 3.5%, shaving roughly $160 billion off its market cap. Fellow chip giants AMD AMD, lower by 5.4%, and Broadcom AVGO, lower by 3.6%, joined the slide. Why? Who knows. But some speculate it’s because the AI sector is too concentrated.

🚀 AI Hype Meets Reality Check

• AI enthusiasm had fueled much of tech’s run-up this year, powered by massive capex booms and lofty earnings expectations. This said, Tuesday marked a stiff reversal. Not a correction or anything too scary, but just enough to act as a shoulder tap, letting investors know valuations are stretched.
• Now stock bros are re-evaluating whether the AI buildout can sustain such blistering growth, especially with Nvidia now accounting for an outsized share of sector momentum.
• In other words, the tech rally has become “top heavy”, increasingly vulnerable to sharp corrections whenever Nvidia wobbles.

📉 Big Tech Joins the Selloff

• The selloff wasn’t just chips and AI — Tesla TSLA lost 3.2%, Facebook parent Meta META wiped out 2%, and Netflix NFLX erased 2%. All Magnificent Seven members took hits as profit-taking spread across megacaps.
• The cohort of elite, ultra-expensive companies collectively lost over $300 billion in market cap, highlighting just how dominant — and fragile — this leadership group has become.
• The pullback follows months of tech outperformance vs. the broader market, making these names prime targets for traders locking in gains ahead of Powell’s speech. Speaking of that…

🎤 Fed, Jackson Hole & Rate Bets

• Traders are keeping one eye on Jackson Hole, where Federal Reserve Chair Jay Powell is set to speak Friday in what would be his final symposium as Fed head (his term ends in May 2026).
• Investors are seeking clues on September rate cuts, with Fed funds futures pricing in an 83% chance of easing at the next policy meeting. And one more by year-end.
• With Powell, minutes, and inflation dynamics in play, brace for elevated volatility across tech-heavy indexes, especially Nasdaq, heading into Friday’s session.