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In a year defined by unprecedented market fluctuations, 2024 has witnessed some of the most dramatic single-day stock swings in history, with 15 out of the top 20 movements occurring in this year alone, according to data sourced from Creative Planning.
What stands out most is the dominance of NVIDIA, a tech giant that has made waves both on the upside and downside of the market.
Highlights of the Biggest Swings
NVIDIA tops the list with the largest single-day gain of $327 billion on July 31, 2024. This impressive jump underscores the market’s high expectations for NVIDIA’s future, largely driven by its advancements in artificial intelligence (AI) and semiconductor technology.
Apple, Meta, Alphabet, and Amazon also feature in the top gainers list, though not with the same frequency as NVIDIA. Apple, for example, recorded a $215 billion gain on June 11, 2024, reflecting the release of a new product or a positive earnings report.
On the other hand, NVIDIA has also experienced significant declines, with the largest drop being $279 billion on September 3, 2024. The presence of NVIDIA in both the biggest gainers and losers lists highlights the concept of volatility—a key factor in stock market behaviour, especially for high-growth technology stocks.
What Drives These Swings?
Stock market volatility refers to the rate at which the price of a stock increases or decreases for a given set of returns. For high-tech companies like NVIDIA, the extreme movements are often driven by several factors:
Earnings Reports: When companies exceed market expectations in their quarterly earnings, stock prices can surge. Conversely, missing targets can result in sharp declines.
Technological Advancements: Stocks of companies at the forefront of AI, cloud computing, and next-generation technologies are particularly sensitive to news related to innovation, as seen in NVIDIA’s rapid swings.
Macroeconomic Factors: Geopolitical tensions, interest rate hikes, or even new regulations can have outsized impacts on these global tech leaders.
A Deeper Dive into the Stocks
NVIDIA: Known for its leadership in graphics processing units (GPUs) and AI computing, NVIDIA has ridden the wave of AI adoption. However, the very factors that make it soar—rapid technological advancements—also expose it to volatility.
Apple: One of the most valuable companies in the world, Apple’s swings often reflect investor sentiment regarding its new product launches. In 2024, the company’s gains were likely bolstered by continued strength in its iPhone sales and its foray into augmented reality.
Meta: As Meta (formerly Facebook) shifts its focus to the Metaverse, its volatility reflects investor uncertainty around the profitability of this move. The Metaverse is a long-term bet, and while it shows potential, it also brings uncertainty.
Alphabet (Google): Alphabet’s presence in both tech and advertising makes it vulnerable to shifts in ad spending and regulatory scrutiny. Its stock swings often coincide with major announcements about new products or government actions concerning privacy.
Amazon: Dominating e-commerce and cloud computing, Amazon’s volatility is driven by its massive scale. Economic trends like consumer spending and the adoption of cloud technologies significantly affect its stock.
What to Expect from 2024 and Beyond
2024’s massive swings are a reminder that market volatility is a double-edged sword. While it creates opportunities for significant gains, it also brings the risk of considerable losses. Investors in highly volatile stocks like NVIDIA, Meta, and Apple should keep an eye on market trends, including technological developments and economic shifts.
For long-term investors, understanding volatility helps mitigate risk. Diversifying portfolios, staying informed about market trends, and focusing on long-term growth potential are crucial strategies. As 2024 shows, volatility may seem daunting, but with the right approach, it offers great opportunities for those willing to navigate it.
In conclusion, 2024's massive single-day stock swings showcase both the promise and peril of investing in tech giants. As these companies continue to dominate the global economy, keeping an eye on volatility will be essential for investors looking to ride the wave of innovation.
Alpesh Patel OBE
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