Stock market today: S&P 500, Nasdaq slip as tech falls, Fed’s Jackson Hole kicks off

After, a roaring rally over the last two weeks in large cap tech, the most loved area of the market over the past 18 months has been quieter in the past few trading sessions.

Goldman Sachs equity strategist Ben Snider told Yahoo Finance the most loved part of the market could now be entering a period of digestion.

“I think most of the short term volatility in those stocks is behind us,” Snider said.

He added, “The trajectory of sales and earnings growth has been resilient, more resilient than a lot of investors feared coming into the second quarter. Valuations are by no means low compared to history, but they’re lower than they were several weeks ago, and we won’t get another earnings report for a few months now.”

Hedge funds trimmed exposure to the “Magnificent Seven” tech stocks, excluding Amazon (AMZN) and Apple (AAPL), for the firs time since the start of 2022, according to Snider’s recent analysis of securities filings for the end of the second quarter.

Snider said this move “speaks to the anxiety we were hearing from investors heading into the second quarter earnings season.”

Snider added investors felt the stocks had performed very well and benefitted from the excitement around AI. But they also expressed “some concern that that AI investment boom was coming to an end.”

But in August that trade has largely shifted, with megacap tech recently leading the S&P 500 (^GSPC) back near highs.

“In my conversations with investors, including hedge fund clients, there was very clearly excitement at the opportunity to buy some stocks that they already liked at lower valuations given the sell off,” Snider said.

Now, after the snapback in tech stocks, investors aren’t as convicted as they were when buying the dip in early August.

“I would call sentiment [around megacap tech] cautiously optimistic,” Snider said.