The Nasdaq Composite index fell 2.2% on Friday, confirming a correction as it dropped 10.2% from its record high set on July 10. This decline reflects growing concerns over inflated valuations in the Big Tech sector and a weakening economy.

The Nasdaq’s latest drop was triggered by disappointing earnings forecasts from major tech companies such as Amazon and Intel, coupled with softer-than-expected job reports. The index closed at 16,776.16 points, marking a significant retreat from its previous peak of 18,647.45 points.

Similarly, the Nasdaq 100 index is approaching correction territory, having declined from its all-time high of 20,675.38 points. A correction is defined as a drop of 10% or more from an index’s most recent peak, signaling widespread investor pessimism.

The recent selloff is exacerbated by disappointing results from Tesla and Alphabet, which have intensified concerns about overvalued Big Tech stocks. The broader decline is fueled by fears that the rally driven by enthusiasm for AI technology and expectations of interest-rate cuts by the Federal Reserve may have been overly optimistic.

Nvidia, Microsoft, and other leading tech stocks have been pivotal in driving Wall Street’s gains in 2024, but recent developments suggest that the AI-fueled rally may be cooling.