Nasdaq Composite falls amid 'OpenAI shock'. Will Mag 7 reports support it?

Technology index Nasdaq Composite in the first minutes of trading on April 28 lost immediately a little more than 1%, but then - slowed the rate of decline, at the time of publication loses 0.75%. Such dynamics it demonstrates against the background of reports that the developer of ChatGPT - OpenAI - has not achieved its own goals for attracting new users and revenue, this was previously reported by The Wall Street Journal (WSJ) with reference to sources.

At the pre-market on April 28, the WSJ article led to a decline in the shares of almost the entire technology sector - especially the shares of companies related to OpenAI and AI. They continued to fall even after the opening of the main trading session: Broadcom, in particular, is down more than 3%, AMD - 2.38%, CoreWeave - 2.7%, Nvidia - 1.85%, Oracle - 3.67%, Qualcomm - 2%. Barron's described the situation as "shock around OpenAI".

OpenAI itself called WSJ's reports "absurd": "We are fully united in our commitment to procure as much computing power as possible and work hard every day to do so together," the company said in a comment to CNBC.

Nevertheless, amid the general decline in the technology sector, the broad index of American shares S&P 500 (minus 0.49%) also opened in the red zone. The Dow Jones blue-chip index is growing by almost 0.2%.

Mark Brent crude oil added 1.9% to more than $110 per barrel. North American WTI with delivery next month is slightly more expensive than $99.

The upcoming publication of financial results of the largest Wall Street technology companies may give the U.S. technology sector a new impetus, analysts surveyed by Bloomberg say. This probably means that the current correction in the tech sector will be moderate, the agency points out.

Nevertheless, JPMorgan Chase strategists note that although the main U.S. stock index - S&P 500 - thanks to optimism about corporate earnings is hovering near record levels and may record at the end of April the best month since 2020, skepticism caused by the conflict in the Middle East, still has an impact on the results of U.S. companies. Thus, some of them, despite a strong start to the year, are refraining from raising forecasts, analysts pointed out.

"While reporting from the 'Magnificent Seven' companies will be a positive catalyst, positioning [in the market] indicates a growing likelihood of a near-term peak forming - a slight consolidation before a bullish rally resumes," Andrew Tyler, head of global market analytics at JPMorgan, wrote in a note to clients (quoted by Bloomberg).

Four members of the "Magnificent Seven": Alphabet, Microsoft, Amazon and Meta Platforms are to publish their quarterly results on April 29. The next day, Apple will present its quarterly report.

This article was AI-translated and verified by a human editor