The Nasdaq Is in a Correction, but Most Stocks Are Rising. Where Is the Money Going?
The Nasdaq 100 is in a correction, but 346 of the 500 companies in the S&P 500 rose on Monday. Money isn’t leaving the market; it’s just moving away from companies paying for AI buildouts with new shares and debt. For holders of technology ETFs, that has one uncomfortable consequence.
Key points
The Nasdaq 100 is in a correction, but 346 of the 500 companies in the S&P 500 and seven of the eleven sectors rose on Monday.
Alphabet reported revenue up 25% and cloud growth of 103%, yet had its worst day since 2004.
Microsoft reported in the same week, and its stock jumped 4%—the difference wasn’t revenue growth.
Oracle raised $20 billion for data-center construction, and its stock fell 8.8% in a day.
Ten companies make up 46.7% of the Nasdaq 100, and most of them depend on the same single bet.
The index is falling, but most stocks are rising
The Nasdaq 100 fell 1.4% to 27,989.82 points on Monday, November 2. That puts it 10.4% below its record close of 31,224.47 points on October 6, meeting the technical definition of a correction. It’s already the third one this year: in March the index fell 12%, in July 11%, and each time it recovered to new highs. Even after Monday’s drop, it is still up roughly 11% year to date.
But anyone who looked beneath the index’s surface saw a completely different day. In the S&P 500, 346 companies rose and only 156 fell. Seven of the eleven sectors advanced. The equal-weighted version of the index, where every company has the same weight, outperformed the market-cap-weighted version for the third day in a row. And the semiconductor index SOX lost 12% in three days.
This isn’t a flight from stocks. Money isn’t leaving the market; it’s just moving from one type of company to another. And that type of company can be described with surprising precision.