As of the close of the week ending October 17, the gap between the Nasdaq and Dow Jones’ weekly performance was the widest since July 2002.
The Nasdaq fell about 2.5% for the week, while the Dow dropped less than 0.5%—a gap of roughly 2 percentage points. That may not look like much, but historically, a gap this wide has occurred only a handful of times. The last time was just as the main leg of the dot-com bust was winding down.
Why was the divergence so sharp this week?
Tech earnings season got off to a rough start. Alphabet and Netflix reported earnings one after the other, and the market disliked both results. SPCX, the SPAC vehicle for SpaceX’s planned backdoor listing, fell 5% for the week and is now down more than 10% from its peak of $175. Tech heavyweights dragged the Nasdaq lower, while traditional Dow blue chips—banks, industrials, and consumer companies—held steady.
Follow that thread to the broader macro picture, and the pressure becomes even more direct:
CPI came in at 3.7% on October 14, above expectations. PPI also topped forecasts on October 15, at 6.3%—its highest level since December 2022. With both inflation readings coming in hot, the market-implied probability of a Fed rate hike on October 28 jumped from near zero to 28%. In this environment, high-valuation tech growth stocks—the most sensitive to interest rates—are under the greatest pressure.
The divergence between the Dow and Nasdaq is, in short, a snapshot of capital rotation: money is moving out of high-valuation AI and tech stocks and into traditional industries and defensive sectors.
What does this mean for crypto?
BTC’s long-term correlation with the Nasdaq is between 0.5 and 0.7. In weeks when tech stocks fall and the Nasdaq comes under pressure, it’s hard for BTC to rally on its own. That week, BTC retreated from around $83,000 to the $80,000 range, moving largely in sync with the Nasdaq.
If tech earnings continue to disappoint and inflation hasn’t peaked, this divergence is likely to persist. In that case, keeping an eye on the Dow’s performance may be more useful than focusing only on the Nasdaq.
Is your portfolio still following the tech narrative, or have you already made a shift?
$BTC
#纳指道指周度差距创2002年7月来最大
The Nasdaq fell about 2.5% for the week, while the Dow dropped less than 0.5%—a gap of roughly 2 percentage points. That may not look like much, but historically, a gap this wide has occurred only a handful of times. The last time was just as the main leg of the dot-com bust was winding down.
Why was the divergence so sharp this week?
Tech earnings season got off to a rough start. Alphabet and Netflix reported earnings one after the other, and the market disliked both results. SPCX, the SPAC vehicle for SpaceX’s planned backdoor listing, fell 5% for the week and is now down more than 10% from its peak of $175. Tech heavyweights dragged the Nasdaq lower, while traditional Dow blue chips—banks, industrials, and consumer companies—held steady.
Follow that thread to the broader macro picture, and the pressure becomes even more direct:
CPI came in at 3.7% on October 14, above expectations. PPI also topped forecasts on October 15, at 6.3%—its highest level since December 2022. With both inflation readings coming in hot, the market-implied probability of a Fed rate hike on October 28 jumped from near zero to 28%. In this environment, high-valuation tech growth stocks—the most sensitive to interest rates—are under the greatest pressure.
The divergence between the Dow and Nasdaq is, in short, a snapshot of capital rotation: money is moving out of high-valuation AI and tech stocks and into traditional industries and defensive sectors.
What does this mean for crypto?
BTC’s long-term correlation with the Nasdaq is between 0.5 and 0.7. In weeks when tech stocks fall and the Nasdaq comes under pressure, it’s hard for BTC to rally on its own. That week, BTC retreated from around $83,000 to the $80,000 range, moving largely in sync with the Nasdaq.
If tech earnings continue to disappoint and inflation hasn’t peaked, this divergence is likely to persist. In that case, keeping an eye on the Dow’s performance may be more useful than focusing only on the Nasdaq.
Is your portfolio still following the tech narrative, or have you already made a shift?
$BTC
#纳指道指周度差距创2002年7月来最大