Technology Stocks Suffer Record Selloff Amid Profit Margin Peaks

Technology stocks suffered a record selloff on Thursday, though futures and overseas markets indicated a potential rebound on Friday morning. This volatility follows a period of record-high corporate profit margins, which reached their peak in the second quarter.

FactSet reported that these margins were driven by corporate tax cuts, lax antitrust enforcement that increased pricing power, and a decline in wages as a share of the economy. While analysts polled by FactSet expect S&P 500 profit margins to continue growing through 2028, some strategists warn that these trends may have peaked.

Market headwinds include rising borrowing costs as cheap debt is replaced and accounting distortions resulting from the artificial intelligence capital expenditure boom. In response to the current instability, some hedge funds have already begun cutting positions and reducing staff.