Nasdaq Pukes To Worst Day In 19 Months, Bonds & Black Gold Bid

So much for the "broadening out of the rally" bullshit!

Semis were slammed - their biggest drop since the COVID lockdowns - as the market had trouble with weaker than expected 3Q guidance from European semi bellwether, ASML (and headline chatter of further crackdowns on chip exports to China)

Source: Bloomberg

The Nasdaq damn broke today as it suffered its biggest single-day drop since Dec 2022...

Source: Bloomberg

Small Caps actually had a down day today (though outperformed Nasdaq) as The Dow hit a new record high...

The last five days have seen Small Caps (Russell 2000) outperform Large Caps (Russell 1000) by the largest amount in history (going back to 1979)...

Source: Bloomberg

The Magnificent 7 stocks have lost a staggering $1.1 Trillion in market cap in the last five days...

Source: Bloomberg

But that's still a drop in ocean in context of how far they have come...

Source: Bloomberg

Under the hood, Goldman's trading desk noted that volumes +17% vs the trailing 20 days and can feel it flow-wise on the desk. S&P top of book tracking much higher as well +11%. Our floor is skewed much better for sale (-8%) with most moving their feet in TMT. Across Semis, we have seen significant supply most concentrated in AI winners. We have also seen supply across rideshare names (UBER, LYFT) + ADRs.

LO activity concentrated in tech, followed by Hcare but slow elsewhere.
HFs also moving their feet in tech, but also active across Consumer Discretionary on the buy side, vs selling Fins, and Hcare. Short ratios elevated across staples.

For context, in cumulative notional terms, the de-grossing activity over the past 5 sessions is the largest since Nov '22 and ranks in the 99th percentile on a 5-year lookback...

Dovish comments from Fed's Waller were largely ignored - though did provide some juice for the initial short squeeze on Small Caps at the cash open...

Source: Bloomberg

Treasuries were mixed today with the long-end very modestly outperforming overall (2Y +1bps, 30Y -1bps). Weakness overnight gave way to a strong bid during the US session as equities sold off...