Tech Selloff Ends Bull Run as Valuation Concerns Hit NASDAQ

The multi-week bull run ended last week, halted by a notable selloff of tech stocks. The NASDAQ experienced a sharp correction, driven by concerns of overpricing and high valuations, particularly in the technology sector. The S&P 500 suffered its worst week in a month, while the Russell 2000 and the Dow also lost value. Most reporting S&P companies have exceeded profit estimates, but a few major companies disappointed, which weighed on market sentiment. Economic uncertainty, exacerbated by the ongoing government shutdown, appeared to further escalate investor concerns. Among the market sectors, Information Technology, Communication Services and Consumer Discretionary fell the furthest, while Health Care, Real Estate, Energy and Financials outperformed. Crude oil prices faced downward pressure, resulting in a drop in prices for the second straight week. The fall in crude oil prices was largely influenced by surging U.S. inventories, an increase in production by OPEC+ and a price cut by Saudi Arabia.

Manufacturing Output Increased, but Tariffs Weigh on Exports

Manufacturing output ticked higher in October, fueled by the best gain in new orders in the last 20 months. However, growth was primarily led by domestic orders, as new export orders fell due to tariffs negatively impacting international trade. The S&P Global U.S. Manufacturing Purchasing Managers’ Index™ recorded 52.5 in October, compared to 52.0 in September.

Eye on the Week Ahead

There will be little relevant economic data available during the government shutdown.