More than 7 trillion USD was blown out of the US stock market

According to CNN, compared to the end of December 2021, the S&P 500 index has dropped by 18%, meaning that $7 trillion in capitalization has “evaporated” from the market.

Notably, stocks of technology companies suffered the most. An estimated $3 trillion in the $7 trillion decline in the S&P 500’s market capitalization came from the technology sector. Stocks of tech giants like AppleMicrosoft, Amazon, Alphabet, Meta Platforms (Facebook’s parent company) and Tesla are all in the red. Private Netflix lost 70% of its value – the biggest drop in the S&P 500 this year.

Along with the S&P 500, the Dow Jones Industrial Average is also down 13% year-to-date.

US stocks are on fire

The stock market plunge is also raising alarm bells for small businesses. They worry that the US economy may lose momentum after it has recovered strongly from the pandemic.

According to data from research firm Bespoke Investment Group, the Nasdaq index has dropped more than 20% in the last 30 trading sessions. According to Bespoke, this decrease has only appeared 11 times before. And 9 of those 11 times are “recession related”. In another report earlier this week, Bespoke said the Nasdaq 100 also had its worst start to the year ever.

However, there is still hope that the market will bottom out soon. “Stocks may continue to sell off for a while longer, but it won’t last forever,” Bespoke said.

According to CNN, investors are waiting for the “give up phase” and when sentiment is at its lowest, speculators start entering the market, starting to buy again.

According to experts, the current market is close to this state. As CNN’s Business Fear & Greed Index shows, market sentiment is currently entering “extreme fear” levels. This index is divided on a scale of 0-100 where from 0 to 25 points is at the level of “Extreme Fear”. Currently, the market is at a score of 6.

Tech giants suffer a lot of “pain”

According to information from CNBC, many stocks sold off after the Fed decided to raise interest rates in the middle of last week, however, technology stocks suffered the most compared to other sectors of the economy. .

Apple has “evaporated” more than $220 billion in value after the close of trading on Wednesday – the time when Fed chair Jerome Powell announced to raise the basic interest rate by 0.5 percentage points, in response to the high inflation rate. On May 11 (US time), Apple was no longer the most valuable company in the world when it was surpassed in capitalization by oil giant Saudi Aramco.

Apple loses position as world’s most valuable company as stock plunges

According to CNBC, in the context of a strong bull market, investors are now less interested in business activities. Instead, money is being pushed more into the more “safe pockets” of the market, which include stocks of leading food companies such as Campbell Soup, General Mills and JM Smucker.

Last week, the FED raised interest rates by 0.5 percentage points, while affirming that it would act urgently to curb inflation, but also said that it is not currently considering raising interest rates by 0.75 percentage points.

Along with the move to raise interest rates, the Fed also signaled that it would reduce the size of its balance sheet, currently at $9 trillion.

Besides technology stocks, the combination of high interest rates and the risk of an economic recession in the context of escalating inflation also caused other groups of stocks to suffer.

* Invite readers to watch programs broadcast by Vietnam Television on TV Online and VTVGo!