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Some market commentators think the US Fed is to be blamed for the worst tech stock kick-off since the 2008 financial crisis.
Major tech stocks that are mostly traded in the United States experienced more sell pressure, following an earlier sell-off in the stock and crypto market. After closing Wednesday trading at $316.38, down 3.84% from the day’s opening price, Microsoft Corporation (NASDAQ: MSFT) stock traded around $315.06, down approximately 0.42%.
Among other affected tech stocks, there are Apple Inc (NASDAQ: AAPL), Alphabet Inc (NASDAQ: GOOGL), SnowFlake Inc (NYSE: SNOW), and DocuSign Inc (NASDAQ: DOCU) that dropped 2.66%, 4.59%, 5.91%, and 6.65% respectively.
Some market commentators think the Fed is largely to be blamed for the worst tech stock kick-off since the 2008 financial crisis. More so now that the coronavirus has rained havoc on the supply chain. Furthermore, the rising level of inflation has caused the Fed to tighten its measures.
Consequently, the Nasdaq Composite Index dropped 522.54 points to close Wednesday by 3.34% down. Additionally, the NASDAQ 100 Index closed yesterday trading at 15,771.78, 3.12% down from the day’s opening price.
The United States stock market was hit hard when Federal Reserve Meeting minutes indicated a possible rate increase in two months. “If we’re expecting US rates to go up, in particular, that should, on a relative basis, hinder tech,” said Daniel Morris, BNP Paribas Asset Management, chief market strategist.
Consequently, institutional investors are now looking at small-cap tech stocks that are both in the United States and overseas. Mind you, small caps tend to have more volatility than large caps in a similar timeframe.
Future Possibilities of the Tech Stocks
While the coronavirus crisis still poses some uncertainty in the market, it is much clearer than it was at the beginning of the pandemic two years ago. More coronavirus vaccines have been rolled out all over the world, with some jurisdictions having administered several doses.
Big tech companies are experiencing a shift in competition as indicated by Pinterest’s falling global user base. Additionally, with geopolitical uncertainty especially between military superpowers, big tech companies are left stranded without a wide room for future growth prospects.
Interestingly, some analysts see a situation where tech companies in Europe, Japan, and some parts of Asia outperform others in 2022.
Andrew Sheets, the chief cross-asset strategist at Morgan Stanley, sees Europe and Japan outperforming this year. “When investors look at those markets they don’t see them as markets that should be punished if interest rates were higher,” he said.