Topline
Tech stocks suffered their widest losses in months Wednesday as a debt downgrade spooked investors out of riskier assets, causing the fortunes of numerous ultra-rich tech billionaires to take a major hit.
Larry Ellison, left, and Elon Musk, foreground, became billions of dollars less rich Wednesday.
Key Facts
The Nasdaq Composite tanked 2.3% by 3:40 p.m. ET, its worst day since February 21; the higher-growth grouping faltered as concerns about the U.S.’ macro conditions mounted.
Driving the losses were the seven mega-cap tech stocks which largely contributed to the market’s blockbuster gains throughout 2023, as Apple (down 1.6%), Microsoft (down 2.7%), Alphabet (down 2.5%), Amazon (down 2.7%), Nvidia (down 4.9%), Meta (down 2.9%) and Tesla (down 2.8%) each fell.
Thanks to the slide, the 10 richest people on the planet lost $26.7 billion collectively, with each top-10 magnate in the red on the day, according to Forbes’ real-time net worth tracker.
Tesla CEO Elon Musk, the world’s richest man, became nearly $5 billion poorer, suffering the biggest hit to his fortune of anyone Wednesday.
Amazon founder Jeff Bezos, Meta CEO Mark Zuckerberg, Alphabet cofounders Larry Page and Sergey Brin and Oracle chairman Larry Ellison also grew billions of dollars less wealthy Wednesday but still rank among the 10 richest people on the planet.
Key Background
The stock slump came after Fitch downgraded its rating for some of the U.S.’s long-term debt offerings from AAA to AA+, one of the only such debt rating revisions in recent history. The Dow Jones Industrial Average and S&P 500 each fell about 1% in Wednesday trading in response, but various economists and analysts stated Fitch’s update should not significantly impact equity performance. The slip in confidence in the federal government’s ability to pay back its debt comes amid a turbulent political and economic climate in the U.S.
Tangent
Following an initial hiccup after the S&P ratings agency downgraded its credit grade for the U.S. in 2011, stocks continued to gain, LPL Financial’s chief fixed income strategist Lawrence Gillum noted Wednesday. The Dow fell 3% in the month after the S&P’s August 2011 announcement but recovered to a 7% gain compared to its pre-downgrade level by year’s end. “The U.S. remains the safe haven during times of market stress and the downgrade will likely not change that,” according to Gillum.