Wall Street Struggles: Nasdaq and S&P 500 End Winning Streaks

November started poorly on Wall Street. The tech-focused Nasdaq dropped over 3%, marking its worst week since early April. The S&P 500 fell 1.6% for the week, also breaking a three-week winning streak.

Two main factors caused this week’s market decline, which followed a strong October.First, investors became worried about the high prices of stocks linked to artificial intelligence. For example, Nvidia lost its $5 trillion market value, falling 7% during the week. This drop was made worse by the realization that China likely won’t be significantly increasing its purchases of AI chips. While Nvidia’s management hasn’t included potential China sales in its forecasts, many investors had hoped for a rebound. Though, we continue to believe Nvidia is a good long-term investment.

Second,there were growing signs that the recent government shutdown was starting to hurt the economy. Job cuts last month were the highest for any October in 22 years, according to data from Challenger, Gray & Christmas. The University of Michigan’s latest consumer sentiment survey also showed a very negative reading.These reports from private companies are especially significant now, as the shutdown-which began on October 1-has delayed most official government economic data.

During this turbulent week, we made three trades.On Monday,we bought more Starbucks stock. The stock price has fallen along with othre restaurant stocks due to fears of weaker consumer spending. We believe this decline is an overreaction. The company’s turnaround plan under CEO Brian Niccol is still strong.

“With shares trading back to their lows from early April, we see this recent weakness as a chance to buy more,” said Jeff Marks, director of portfolio analysis for the Investing Club. “Niccol is working on an ambitious plan to improve the coffeehouse experience and fix stores through a new operating and staffing model called Green Apron Service. It’s taken time, but the turnaround is happening.”

The Club also purchased more Boeing stock on Tuesday. Shares dropped after the company’s earnings report last week,due to a larger-than-expected cost related to its 777X program. While the quarter was disappointing, the decline created a good opportunity for long-term investors.

“The turnaround under Boeing CEO Kelly Ortberg is still progressing well, driven by improvements in its 737 program,” Marks said.