Technology stocks were hit again, with Nasdaq falling more than 4% as investors dumped stocks of well-known companies on fears of slowing growth, rising inflation, and rising interest rates.
After facing the worst month in more than 10 years, the tech-heavy index continues to deflate. Many companies are facing the risk of losing their recently gathered value due to the pandemic induced “remote only” boom.
The National Association of Securities Dealers Automated Quotations Stock Market (Nasdaq) has lost more than a quarter of its value since 2022, as all the pandemic favorites such as Peloton, Netflix, and Amazon faced serious sellouts. Software company Palantir and electric car maker Rivian each lost more than 20%.
The recent plunge of the stock market is one of the major indicators that economists are closely monitoring and they are also trying to predict the economy’s broader direction.
At 3.6% the unemployment rate has become very low, although growth has slowed noticeably. The economy too contracted in the first three months of 2022.
With the onset of coronavirus, tech companies surged in sales as consumers sought products and services that could stay connected while they were isolated at home. Some companies packed five years of growth into two years. But now, as investors react to the outlook for economic stagnation, big companies are also paying for high inflation and the possibility of a recession.
Incidentally, Apple started off 2022 by becoming the first company to be worth $3 trillion. But within a few months, even after reporting record earnings last quarter, the share price dropped more than 16%.