Friday’s rebound hasn’t found its footing yet, and $NVDAB fell another 5% before the bell. The Nasdaq dropped 3.4% last week, while XLK posted its worst weekly performance since April 2025. On Thursday, Nvidia lost about $440 billion in market value in a single day. SOXX is down 38% from its 52-week high, and Micron is down 45%. On Friday, AMD bounced 9% and Micron rose 5% as the stocks hit hardest the day before were bought back. Is this short covering or money flowing back in? We’ll find out at tonight’s open.
Wall Street analysts are divided. BofA thinks this selloff is about valuation multiples; its FY2028 EPS forecast is still above the consensus estimates for most companies. Morgan Stanley believes the pullback may be nearing its end. Citi, meanwhile, downgraded U.S. equities and upgraded European equities. Three interpretations of the same market.
For a stronger scenario, the key is whether buyers can absorb that 5% premarket drop after the open. If leaders with strong order books and pricing power hold above Friday’s lows, and retail ETF buying against the trend is joined by institutional short covering, Friday’s recovery may finally gain a foothold.
A back-and-forth market is more likely. A valuation reset is unlikely to be over in a week. Leading stocks may hold up relatively well, while companies with nothing but a story continue to bleed, leaving the indexes to churn and digest the pullback.
In a weaker scenario, watch out for retail buying turning into passive bag-holding. If losses deepen after the open and Friday’s gains are completely wiped out, hedge funds may not be done unwinding positions, and the Nasdaq’s gap of more than 10% from its high could widen further. The strength of buying in the first half-hour after tonight’s open will probably offer an early answer.
Wall Street analysts are divided. BofA thinks this selloff is about valuation multiples; its FY2028 EPS forecast is still above the consensus estimates for most companies. Morgan Stanley believes the pullback may be nearing its end. Citi, meanwhile, downgraded U.S. equities and upgraded European equities. Three interpretations of the same market.
For a stronger scenario, the key is whether buyers can absorb that 5% premarket drop after the open. If leaders with strong order books and pricing power hold above Friday’s lows, and retail ETF buying against the trend is joined by institutional short covering, Friday’s recovery may finally gain a foothold.
A back-and-forth market is more likely. A valuation reset is unlikely to be over in a week. Leading stocks may hold up relatively well, while companies with nothing but a story continue to bleed, leaving the indexes to churn and digest the pullback.
In a weaker scenario, watch out for retail buying turning into passive bag-holding. If losses deepen after the open and Friday’s gains are completely wiped out, hedge funds may not be done unwinding positions, and the Nasdaq’s gap of more than 10% from its high could widen further. The strength of buying in the first half-hour after tonight’s open will probably offer an early answer.