US stocks have been falling in recent weeks. The S&P 500 Index has fallen by 7.65% since its peak this year. Nasdaq, the popular index that tracks technology giants, is in a correction after falling over 10% since its year-to date high. The popular S&P ETFs such as IVV, VOO, and SPY have all crashed.
AI-jitters is the primary reason behind the S&P 500 index drop
Market participants generally believe that Donald Trump’s tariffs are to blame for the current S&P 500 crash. This is true. However, when you look closely at top and bottom performers in the S&P 500 index, it becomes clear that tariffs did not affect the companies most likely to suffer.
Ford, for example, has seen its stock rise by 1%, while General Motors’ has fallen by 6%. Kroger, Dollar General and other companies dealing with imports have also done well in this past year.
The most notable drop this year was the 0.80% decline in the Invesco S&P 500 ETF (RSP), while the S&P 500 Index dropped 3.6%. This year, the SCHD has risen 1.6%.
There are indications that the current SPY, VOO, and IVV ETFs crashes have more to do technology stocks rather than the overall market. All seven companies of the Magnificent Seven have fallen, but Nvidia and Tesla are the worst victims.
There are fears that AI is slowed down. This is the most probable reason behind the current US stock market crashes. The broader market, which has funded AI companies for years, does not share this view. PerplexityAI raised cash this week at an $18 billion valuation.
The majority of publicly traded AI stock like BigBear AI, C3.ai and NVIDIA have fallen by double-digits since their highs this year. The C3.ai share price has fallen by half from the peak reached in December. AMD’s stock is down 53% since its peak in 2024. NVIDIA’s stock has fallen by more than 15% since its peak this year.
The AI industry appears to be cooling. Most companies are reporting strong, but decelerating profits. NVIDIA’s revenues in the fourth quarter grew by 70% and led to a 66% growth YoY for the first. Analysts predict that NVIDIA revenue will increase by 56 percent this year, and 23,3 percent next year.
Stock price Analysis of SPY ETF
In this article from January, we discussed the second reason for why S&P 500 has fallen. We warned in that article that the S&P 500 index was going to crash because of a rising wedge pattern and a double top at $610 In that article, we warned the index would plunge because it formed a rising wedge and a double-top pattern at $610.
Now that the index is below both 50-days and 100-days moving averages it’s clear to see bears have taken control. There is therefore a chance that the index, as well as its ETFs like the VOO and IVV, could continue to fall in the days ahead. SPY’s initial targets are the low of the past year (547) and the psychological level at 504 for its stock.
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