As Global Markets Roil, Strategist Soothes Nerves: 'Some Normal Action Under The Surface' As 'Tech Got Way Ahead Of Itself'

It has been a “Black Monday” for the global stock markets as stocks across Asia fell, led by the Japanese market, and the index futures trading suggests a similar predicament for the rest of the global markets. On Sunday, CNBC Mad Money host Jim Cramer and Carson Group’s Ryan Detrick weighed in with their thoughts on the development.

What Happened: The Nasdaq 100 and the R2K futures are down a steep 3%+ at last check, while the broader S&P 500 Index is down about 1.75%. If the losses carry over to the regular session, it would mark a third straight session of markedly negative performance by the U.S. market, with techs being the worst performers.

The sell-off that began last week was triggered by twin negative tidings the traders received on Thursday. The contraction in the manufacturing sector worsened and the jobless claims rose sharply, aggravating concerns about a potential hard landing by the U.S. economy. Negative tech earnings and worries concerning artificial intelligence tech stalwart Nvidia Corp. NVDA coming under the Department of Justice scanner took sail out of the markets on Friday.

Monday’s global market weakness marked an extension of the negative sentiment, precipitated by the unwinding of the yen carry trades.

See Also: Best Depression Stocks

Market Watchers React: “The futures are down so hard on nothing,” said CNBC’s Cramer. “We aren’t oversold enough yet for a real bounce,” he added.

The stock market has been on a tear since the start of 2023 after it emerged from a bear market in Oct. 2022. From the bear market bottom of 3,491.58 on Oct. 13, 2022, the S&P 500 has gained over 53%.

Carson’s Detrick echoed a similar sentiment. He noted that the Dow Jones Industrial Average is only 3.5% off its high and the S&P 500 Equal-Weighted Index is down only 20%. While conceding that there would be more selling on Monday, he said, “Maybe more pain is needed.”

He reasoned that the current sell-off is a function of a strong tech stock-run-up. “Tech got way ahead of itself and it is skewing what is really some normal action under the surface,” he said.

Dow is only 3.5% off the highs.

S&P 500 equal-weight is only 2.9%.

Yes, looks like more tomorrow and maybe more pain is needed, but let's put things in perspective here.

Tech got way ahead of itself and it is skewing what is really some normal action under the surface. pic.twitter.com/SKr2eAI3qP

— Ryan Detrick, CMT (@RyanDetrick) August 5, 2024

Ives optimistic: Wedbush analyst Dan Ives, who is bullish on the tech sector, suggested in a note released over the weekend it is premature to call for a tech wreck. “While we clearly get the worries/fears the US consumer is weakening (Amazon consumer softer print), Fed is late to the game, hard landing/hello again bear thesis returning…we focus on tech spending and the winners that will be front and center in this massive AI tech buildout that is still in the 2nd inning of a 9 inning game," he said.

The SPDR S&P 500 ETF Trust SPY, an index tracking the S&P 500 Index, ended Friday’s session at $532.90, down 1.86%, according to Benzinga Pro data. The Invesco QQQ Trust QQQ fell a steeper 2.37% to $448.75.

Read Next:

• Chip Stocks Staring At Another Bloodbath As Intel Tumbles, Nvidia Dips 4%, ASML Crumbles Over 6%: What’s Ailing The Sector Friday

Image via Unsplash