The “magnificent seven” tech stocks lost more than $280 billion in value after multiple earnings reports were made public on October 25, raising concerns about an impending tech recession.

The top seven blue-chip tech companies are Apple, Microsoft, Meta, Amazon, Alphabet, Nvidia, and Tesla. They collectively account for a quarter of the value of the S&P 500 index and are referred to as the “magnificent seven.”

The stock price of Alphabet, the parent company of Google, dropped by more than 9%, wiping almost $180 billion from its market capitalization. This was Google’s worst day since the COVID-19 pandemic struck in March 2020. YCharts shows that the share prices of Amazon, Nvidia, and Meta decreased by 5.5%, 4.3%, and 4.2%, respectively.

Tech Stocks Lost More Than $280 Billion Causing a Tech Turmoil

Tech Stocks Lost More Than $280 Billion as Crypto Surges

Microsoft was the only one of the seven to defy the trend, with its share price climbing 3.1% following the company’s announcement of better-than-expected growth in its Azure business. Apple and Tesla saw less severe declines in share prices, falling 1.9% and 1.35%, respectively.

“This is the most widespread tech selloff in months, which has resulted in a 5-month low for the S&P 500,” Kobeissi said.

“This is what happens when the few stocks that are holding up the entire market break,” the firm said.

“It seems like buyers are becoming more hesitant as headwinds accumulate,” Kobeissi noted in a follow-up response.

The Crypto Surge

Google search statistics have also shown fears of a “stock market crash,” with the three-word term up 233% in the past week, according to Andrew Lokenauth, a reporter for TheFinanceNewsletter.com.

However, the market for cryptocurrencies has been rising due to hope for potential US spot Bitcoin ETF approvals. As of last week, the market valuation has increased by 16.3% to $1.3 trillion, according to CoinGecko.

Over the past seven days, the prices of Bitcoin (BTC), Ether (ETH), Binance Coin (BNB), and XRP have climbed by 23.3%, 16.7%, 8%, and 15.2%, respectively. Nonetheless, the cryptocurrency market hasn’t demonstrated that it is impervious to challenging macroeconomic circumstances.

According to CoinGecko, the market value of cryptocurrencies dropped by 61.7% from $2.37 trillion to $907 billion during the first two quarters of 2022. However, the actual gross domestic product of the United States experienced a decline.

Tech Stocks Lost More Than $280 Billion as Crypto Surges

Because of its extraordinary volatility, previous research from the Multidisciplinary Digital Publishing Institute reveals that Bitcoin still tends to trade like a “tech stock” over the long term. This intention holds despite experts’ speculation that it will further decouple from tech stocks and the S&P 500. It can, however, be a good hedge against the US dollar, with which it has a negative correlation, according to a study from October 2022.

Since September 1st, Bitcoin has been independent of the NASDAQ 100, rising 34% while the NASDAQ has dropped 8.6%. In the meantime, given the recent declines in major banking equities, some commentators have suggested that the recent investor moves could be seen as a “flight to safety” toward Bitcoin.

In conclusion, the significant $280 billion tumble in the “Magnificent Seven” tech stocks amid a crypto surge underscores the growing influence of digital currencies on financial markets. Investors should remain vigilant as the crypto landscape continues to evolve, potentially reshaping the dynamics of the tech sector and global finance.