Tech stocks tumbled Wednesday after a string of disappointing earnings reports from industry heavyweights spooked investors.
The tech-heavy Nasdaq fell sharply at the start of trading and after a brief rally fell 1.2% in midday trading. The S&P 500 he fell 0.2%.
Taking a step back, Nasdaq has lost more than 29% of its value this year. In contrast, the broad-based S&P 500 is down 19% for him. Tech companies have been some of the biggest winners in the early stages of the pandemic. have moved online, but are finding it harder to generate growth.
After markets closed on Tuesday, Microsoft reported the slowest revenue growth in five years and signaled that the tough times may continue when it released financial forecasts for the quarter that fell short of Wall Street expectations. suggested. The stock fell about 6% on Wednesday.
Google parent Alphabet said its profits were down 27% from a year ago, and executives told analysts that advertisers were spending less on marketing things like insurance, loans and mortgages. Shares fell more than 7% on Wednesday.
Tech stocks are experiencing significant volatility as inflation and high interest rates put pressure on household and business budgets and investors worry about the economic outlook. The strong dollar is also hurting the finances of multinational corporations. This is because multinational corporations will earn less when converting their huge overseas sales into dollars.
The technology sector accounts for more than a quarter of the S&P 500 index and has a significant impact on the overall market. Together, Alphabet, Amazon, Apple, and Microsoft account for almost one-fifth of the index’s value. Relatively small movements in the stocks of these companies can be worth billions of dollars in market value.
Meta, the parent company of Facebook and Instagram, is set to report its latest quarterly results on Wednesday. Confusion about the advertising market reflected in Alphabet’s results and recent reports by social media company Snap and music streaming service Spotifyhit Meta’s stock, which fell more than 4 percent. On Monday, Brad Gerstner, chief executive of hedge fund Altimeter Capital, said: letter He urged Meta CEO Mark Zuckerberg to cut staff by 20% and cut spending by $5 billion annually.
Apple and Amazon are due to release earnings reports on Thursday. With Apple down 1.4% and Amazon down 3.5%, both companies are under pressure in the dark mood surrounding tech stocks.
Steven Gundel contributed to the report.