The fundamental factors triggering this market decline are as follows:

1. "Artificial Intelligence Bubble" Fear and Technology Sales
The biggest reason for the decline is profit-taking in tech stocks and concerns over overvaluation.

• Expectations vs. Reality: Giants like Broadcom (AVGO) and Oracle (ORCL) reported earnings that exceeded expectations, yet their shares fell sharply. Investors are now focusing not only on strong profit figures but also on when the billions of dollars spent by these companies on AI infrastructure will yield (ROI).

• Sustainability: Situations such as Oracle's expenses being 40% higher than expected have created fears that "Will these expenses erode profitability?" leading to chain selling in tech stocks like (Nvidia, AMD, Microsoft, etc.).

2. "Facing Reality" After the Fed Decision
The Federal Reserve (Fed), as expected, cut interest rates by 25 basis points at its December 10th meeting. However, the market responded with a "buy the rumor, sell the news" mentality.

• Inflation Persistence: Statements from Fed Chair Jerome Powell emphasized that inflation remains above target and the labor market is weakening. This raised concerns that the expected rate cuts in 2026 might not happen as quickly as the market hopes.

• Divided Fed: Meeting minutes and votes indicated disagreements among Fed members regarding rate cuts. This uncertainty dampened investor appetite.

3. Sector Rotation (Rotation)
Not all stocks are falling; in fact, a sector shift is underway.

• Technology Declines, Industrials Hold: While the tech-heavy Nasdaq drops sharply, the more traditional Dow Jones index remains relatively stable or slightly rises. Investors are shifting from high-risk tech stocks to safer industrial and value stocks that will benefit from rate cuts (Value Stocks).

I do not believe the tech rally is over; it will continue until mid-2026.

#Nasdaq #SPX500