Technology stocks sold off, US stocks fell the most since June 2020

On May 5, the US stock exchange was “red on fire” and the “criminals” were cloud computing, e-commerce, and home technology firms. Hundreds of billions of dollars in capitalization have “evaporated”, causing the Nasdaq Composite Index to have its strongest shake since June 2020.

A day after the Fed raised interest rates by 0.5% to curb inflation, investors began selling technology stocks – a sector often seen as a growth engine – amid gloomy economic worries ahead. prior to. Big Tech also didn’t escape a wave of sell-offs, with Amazon shares down nearly 8%, Meta down nearly 7%, Apple down nearly 6%, Google down about 5% and Microsoft down 4%. Overall, the Nasdaq fell 5%.

Investors are especially worried about e-commerce after Shopify, which has benefited greatly from the Covid-19 epidemic by helping to digitize retailers, reported disappointing first-quarter results. Shopify stock is down 15%. Ebay and Etsy also recorded double-digit declines.

The situation in technology stocks reversed from the end of 2021 due to rising inflation and the possibility of rising interest rates, prompting investors to look to safer and more safe sectors such as energy and finance. The next punch was the Russia-Ukraine conflict in February, which pushed up energy prices and raised concerns about supply chain disruptions and weakening business conditions in many parts of the world.

The first quarter of 2022 is the worst period for Nasdaq since the first quarter of 2020, the early days of the epidemic. Although only halfway through the second quarter, the Nasdaq is down 21% this year.

Cloud stocks – which have been a favorite during Covid as businesses need to use the cloud to work remotely – were also severely affected in the 5/5 trading session. Billing software developer Bill.com fell 13%, while project management software company Asana fell 11%.

Firms that have benefited greatly from Covid-19 such as Netflix, Zoom, Peloton and Twilio are even more miserable. Shares of these companies are all down more than 45% so far and fell even deeper on May 5.

The market initially reacted relatively positively on May 4 after Fed Chairman Jerome Powell said the Federal Open Market Committee was not actively considering raising interest rates by more than 0.5%. However, the prospect of continued interest rate hikes led to a negative reaction on May 5, resulting in the aforementioned sell-off.

Du Lam