TheDrop Market Analysis, 9/3/24

Following a cliffhanging Labor Day Weekend, the market finally kickstarted this September on a bad note.

Historically September has been a very bad month for most stocks in general. In 1929, September witnessed the S&P 500's deep decline of almost 30% following the Wall Street Crash, and in 2008 the index lost a significant amount in September after the collapse of Lehman Brothers.

All index funds are down. The S&P by 2%, the Dow by 2% and the Nasdaq by 3%. There is one clear reason for this all-round disaster in the stock market: the Department of Justice. The DoJ announced today that it will start subpoenaing large companies such as Nvidia, which make up significant portions of the market, for violating antitrust laws.

To the surprise of nobody, Nvidia fell by 9% today. The antitrust laws, combined with low enthusiasm following the "underwhelming" but not really poor earnings report last week, caused a deep selloff, bringing the chipmaker below its highest highs and its lowest lows from this year. It lost almost $20 in share price alone in just three months and lost over $200 billion in market cap in one day. Following the coattails of Nvidia were Apple, Microsoft, Google, and Amazon, all of which share Nvidia's same pool of investors seeking returns from their latest innovations in AI. Even AMD, Nvidia's largest competitor, fell by a whopping 7%, highlighting the rather poor attitude in the chips and AI industry at the moment.

There aren't any notable growth patterns today. Any growth in the markets is only due to previous lows entering stages of recovery, especially in companies which has faulty earnings reports last week and are now entering the "consolidation" stage of recovery.