Tech stocks are off to their worst start to a month since December with the Nasdaq down 3% already
- The Nasdaq Composite has slipped at the start of August, putting a five-month winning streak at risk.
- The tech-heavy index is off to its worst start to a month since December 2022.
Tech stocks are quietly having their worst start to a month so far in 2023, giving up some of their torrid year-to-date gains as investors lock in their profits and Treasury yields spike.
The sector-tracking Nasdaq Composite has slipped 3% in August for its worst first six trading days of a month since December 2022, putting a five-month winning streak at risk.
The index has still jumped 32% year-to-date despite those losses, powered higher by a massive surge in interest in artificial intelligence and a rapidly cooling inflation, which has boosted traders' belief that the Federal Reserve is close to the end of its interest-rate hiking cycle.
But that run has stalled in August, with Wall Street weighing up two high-profile moves by ratings agencies and bonds emerging as a potentially viable alternative to equities.
Fitch slashed the US's credit score last week, rattling markets and driving the Nasdaq 2% lower in the space of just two days.
Fellow "Big Three" agency Moody's added to investors' list of worries Tuesday when its downgrade of 10 US lenders sparked a sell-off in bank stocks and dragged the index down another 0.8%.
Meanwhile, yields on 2-year and 10-year US Treasury notes have climbed higher as the US government issues more bonds to raise debt, offering traders seeking higher returns a potential alternative to stocks at a lower risk level.
August has been the second-worst month for the Nasdaq over the past 52 years, according to data from Dow Jones – with the tech benchmark only tending to perform worse in September.
The S&P 500 and Dow Jones Industrial Average are also off to weak starts this month, sliding 2% and 0.7%, respectively.