By Logan Gilland, CFP®
Stocks are sliding on Thursday, and the selling is getting heavier as the morning goes on. At the time of writing this the Nasdaq is down close to 4%, and NVDA is leading the way lower, down close to 8%. Those are big moves, and they could continue.
The move today is erasing much of the strong move yesterday in the broad markets. On Wednesday the Dow Jones jumped more than 1,500 points, the S&P 500 gained about 1.5% and the Nasdaq rose 1.4%. Democrats won big on Tuesday, and the market took it as a sign that we may see some kind of resolution in Iran. Oil fell roughly 8%, interest rates fell with it, and stocks climbed. We also got clarity on who is in government, and President Trump accepted the results and said he could work with Democrats more than people may expect.
If you watched closely what was not going up on Wednesday, it was the names closely associated with AI. The blue wave that gave the market hope on Iran also raised fears about this space. Investors worry that a Democratic Congress could slow the AI buildout, and AI names took hits yesterday. Today those hits are turning into real selling. The bears are coming out, and AI is in their crosshairs.
We have been light on technology compared to the broad indexes in client portfolios for a reason, but I think we may see overselling here. I do not see the hyperscalers significantly backing off their AI spending even with the change in policy makers. That tells me the decline in the AI trade may be more of a short term challenge than a long term one. Still, markets can punish these names for longer than investors expect.
I know a day like this can be unsettling, so I want to remind you why we own the less volatile parts of your portfolio. Three weeks ago, it seemed that few investors wanted to touch a bond. They had dropped over the past several months as concerns over the Fed and Iran grew. Today, one of the only things green on my screen is U.S. Treasuries and bonds. Areas outside of technology are also seeing smaller declines. That is diversification at work, and it matters most when markets shift like this.
Days like this are tough. However, your plan was built with days like this in mind. We don’t know when they will come, but we know they will. That is why your portfolio isn’t all built around any single investment.
As always, if you want to chat with us or our team give us a ring. 859-881-0777.
Talk again soon,
Logan
Logan Gilland, CFP®, is Director of Wealth Management at Bluespring Wealth’s Lexington office, where he helps clients turn financial goals into practical plans. He also shares straightforward financial guidance through the DIY Money podcast, Savings & Sense radio show, and his weekly newsletter, Logan’s Lens. Outside the office, Logan and his wife, Hannah, enjoy hosting friends and planning their next national park trip.
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