STORY: The Nasdaq and the S&P 500 tumbled from record highs on Thursday, hit by losses in Nvidia and Tesla as investors rotated into smaller companies after softer-than-expected inflation data fed hopes the Federal Reserve will cut interest rates in September.
Lower rates tend to be “great news for tech companies,” explained Morris, as “their discounted cash flow models make them worth more, and it’s easier for them to get capital to grow. Today, we saw that investors are starting to move out of that trade and look for the S&P everything else, the non-big tech trade and that’s normal.”
Added Morris, “We needed that capital to find its way beyond 7 or 10 firms in the market. Long-term, that wasn’t going to be a healthy thing.”