December 5, 2022

Tech stocks plunged again, with the Nasdaq being the worst month since 2008

The Dow Jones Industrial Average fell more than 900 points on Friday as another sharp sell-off led by technology stocks added to Wall Street’s losses in April, with the S&P 500 having its biggest monthly slide since the outbreak.

The Internet retailer Amazon experienced a sharp decline in the market after recording its first loss since 2015. The crash plunged Amazon’s market value to more than $ 200 billion.

The benchmark S&P 500 fell 3.6% and ended April with a loss of 8.8%, its worst monthly decline since March 2020. The Dow fell 2.8%.

After the financial crisis of 2008, the overweight Nasdaq mix with technology stocks, which ended in April with a loss of 13.3%, suffered the most damage this month.

As the recent round of corporate earnings hit the market, key indices shifted between declines and rallies throughout the week. Investors have been particularly critical of financial results from large technology companies, industrial companies and retailers.

But some disappointing results or views from Apple, Google’s parent company and Amazon helped boost sales this week.

“Concerns about a deepening recession in the economy are gaining momentum as you begin to hear from companies that perhaps demand has fallen, and where are we,” said Quincy Crosby, lead role strategist at LPL Financial.

Traders continue to worry about the harsh drug used by the Federal Reserve in the fight against inflation: higher interest rates. The central bank is expected to announce another round of interest rate hikes next week, which will further increase the cost of borrowing for car buyers, using credit cards and taking out mortgages to buy homes.

“Rising cost pressures and uncertain outlook for big tech names have provoked investors to go over the weekend, and investors are unlikely to be comfortable at any point of time. Said.

The S&P 500 was down 155.57 points at 4,131.93 on Friday. The benchmark index for this year is now down 13.3%. The Dow fell 939.18 points to 32,977.21. The Nasdaq was down 536.89 points at 12,334.64. This is down 21.2% so far this year.

Small company stocks are also having a hard day. Russell 2000 was down 53.84 points, or 2.8%, at 1,864.10.

Big Tech is leading the market down every month as traders avoid the high flying sector. Tech recorded huge gains during the epidemics and is now starting to see higher prices, especially as interest rates rise sharply as the central bank accelerates its fight against inflation.

Amazon, an Internet retailer The 14% decline was one of the biggest declines in the S&P 500, a day after it reported a rare quarterly loss and gave investors a disappointing return forecast. Amazon’s weak update comes as Wall Street worries about a possible recession in consumer spending with rising inflation.

As the economy recovers from the epidemic, prices for everything from food to gas are rising, and there has been a major disconnect between high demand and backward supplies. Russia’s invasion of Ukraine Rising prices of oil, natural gas, wheat and maize have only added to inflation concerns.

Inflation, which the Federal Reserve closely monitors, rose to 6.6% in March, the Commerce Department said on Friday. Further evidence that four-decade 12-month highs and rising prices are putting pressure on home budgets and the health of the economy compared to a year ago.

A recent report on rising US inflation, following a report by statistics firm Eurostat, shows that inflation rose to 7.5% in April. For 19 countries that use the Euro.

Bond yields have risen following warmer measurements of inflation. The revenue of the 10 year treasury increased from 2.85% to 2.92%.

Continuing rising inflation has prompted central banks to raise interest rates to mitigate the impact on businesses and consumers.

Much of the concern on Wall Street in April centered on how quickly the central bank would raise its core interest rate and whether a series of aggression would slow economic growth. The central bank chairman has indicated that the central bank may raise short-term interest rates to more than double the usual levels at meetings starting next week. It has already raised its core overnight rate once, the first such increase since 2018, and Wall Street expects several major increases in the coming months.

Investors spent most of April shifting money from big tech companies, whose stock values ​​benefited from lower interest rates and shifted to lower risk areas. The consumer staples sector of the S&P 500, which includes many home and personal product manufacturers, was the only sector to make a profit on the benchmark index in April. Other safe-playing sectors, such as utilities, outperformed the broader market, while technology and communications stocks were the biggest losers.