Tech stocks just had their worst two-week stretch since the start of the pandemic.
For the third quarter, the tech index goes into the red. The Nasdaq Composite has fallen more than 5% in recent weeks.
Tech stocks rallied early in the quarter, but lingering inflation and cautious comments from the Federal Reserve dampened that enthusiasm. Tech companies that had seen more than a decade of steady growth are now reporting cutbacks.
After losing 5.5% the week of 09/15/2022, the Nasdaq Composite fell 5.1% this week. This marks the worst two-week period for the tech index since its fall in March 2020.
"Investors have been dumping tech stocks since late 2021, betting that rising inflation and rising interest rates would have an outsized impact on the companies that rebounded the most during boom times. The Nasdaq is now just above its two-year low set in June".
For the 3rd time in a row, the FED raised these rates by 0.75, thus bringing the value back to 3 - 3.25, one of the highest values since 2008. This increase further strengthened the Dollar against the Euro and other currencies .
The Dollar being more expensive, the products of American tech companies become more expensive for export and sell less well, their stock market value has therefore fallen and, since the FED rates are not likely to fall in the coming days, we must expect a further drop in tech stocks from the Stock Exchange, Nasdaq, etc...
Overall, tech stocks are all down (except Apple), and the trend is not going to reverse in the next few days, at least as long as FED interest rates are high:
This week of 20/09/2022.
- Amazon - 8%
- Google parent Alphabet - 4%
- Facebook Parent Meta - 4%
- Sharing economy companies. Airbnb, Uber, Lyft and DoorDash all suffered declines of between 12% and 14%.
the most important decreases:
GitLab -16%, Bill.com -15%, Asana -14% and Confluent -13%.
Forecast.
- Alphabet, which experienced a 40% increase last year, forecasts single-digit growth.
- Apple should reach around 6%
Investment advice.